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GOP State Attorneys General Threaten Legal Challenge To Credit Cards Labeling Gun Purchases

'We will marshal the full scope of our lawful authority to protect our citizens'


In an effort spearheaded by Tennessee Attorney General Jonathan Skrmetti and Montana Attorney General Austin Knudsen, 23 state attorneys general have co-signed an open letter warning credit card companies that any attempt to classify the sale of guns and ammunition under a different merchant category code would be met with legal action.

Earlier this month, three of the four major credit card companies announced that they would be utilizing a new identifier to label transactions at businesses that sell firearms and ammunition. The decision, which activists say may one day allow law enforcement to respond to suspicious gun and ammunition purchases proactively, was met with widespread criticism from conservative commentators who characterized the change as a loophole past the prohibition on creating a national firearm owners database.

In response to these concerns, the attorneys general in the states of Alabama, Alaska, Arkansas, Arizona, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, Wyoming, and West Virginia issued a public letter pledging to use every tool at their disposal to fight the change.

First, efforts to track and monitor sales at gun stores would only result in vague and misleading information. This categorization would not recognize the difference, for example, between the purchase of a gun safe and a firearm. Nor would it capture firearm purchases made at department stores, resulting in arbitrarily disparate treatment of “gun store” merchants and consumers.

More importantly, purposefully tracking this information can only result in its misuse, either unintentional or deliberate. Creating and tracking this data only matters if your institutions are considering using that information to take further, harmful action—like infringing upon consumer privacy, inhibiting constitutionally protected purchases by selectively restricting the use of your payment systems, or otherwise withholding your financial services from targeted “disfavored” merchants.

Be advised that we will marshal the full scope of our lawful authority to protect our citizens and consumers from unlawful attempts to undermine their constitutional rights. Please keep that in mind as you consider whether to proceed with adopting and implementing this Merchant Category Code.

Merchant category codes are four-digit identifiers used by credit card companies to classify the type of business or goods being sold at a business running credit card transactions. Earlier this year, the International Organization for Standardization which governs the creation of merchant category codes received an application to introduce the new code and approved the request.

The move, which began with an application by the self-described “socially responsible” bank, Amalgamated Financial, was given a final push across the goal line by organizations like the California State Teachers’ Retirement System and the trustees of New York City’s public pension funds. A statement from New York City Comptroller Brad Lander described the collective effort by these institutions to pressure credit card companies:

Today, New York City Comptroller Brad Lander, Mayor Eric Adams and trustees of the New York City Employees’ Retirement System, Teachers’ Retirement System, and Board of Education Retirement System announced the filing of a shareholder proposal at Mastercard and American Express, two of the world’s largest credit card issuers. The proposals ask the boards of both companies to assess and publicly report to all investors on their oversight of management’s decision-making regarding any application to the International Organization for Standardization (ISO) to establish a merchant category code (MCC) for gun and ammunition stores.

. . .

The three City pension systems and CalSTRS own 1.74 million combined American Express shares valued at approximately $241 million; 2.6 million combined Mastercard shares valued at approximately $834 million; and 4.8 million combined Visa shares valued at approximately $951 million as of June 30, 2022.

Democrat politicians such as Senator Elizabeth Warren, who co-authored a public letter to the credit card companies with Congresswoman Madeleine Dean, obtained the signatures of 26 other members of congress who lobbied on behalf of the category change.

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