Last September, the International Organization for Standardization (ISO) approved a Merchant Category Code (MCC) for firearm retailers. Since the ISO’s decision, NRA-ILA has worked to alert financial industry stakeholders to gun owners’ concerns and urged state lawmakers and attorneys general to address this matter. To date, several states and their attorneys general have taken important steps to protect Americans’ Second Amendment rights and privacy.
Citing severe opposition to the adoption of a firearm retailer MCC, on March 9 American Express, Mastercard, and Visa announced that they had paused implementation of the new code. Specifically, Reuters reported that state legislation to restrict the use of the firearm retailer MCC prompted the companies to halt implementation.
The ISO is a Geneva-based non-governmental organization that consists of a network of “standards bodies” from around the globe that create consensus across various countries and industries. MCCs are used by payment processors (like Visa and Mastercard) and other financial services companies to categorize transactions. MCCs enable payment processors and banks to identify, monitor, and collect data on certain types of transactions. Before the ISO decision, firearm retailers fell under the MCC for sporting goods stores or miscellaneous retail.
The ISO adopted the new firearm retailer MCC at the behest of Amalgamated Bank, and over the objections of industry stakeholders. Amalgamated Bank is a left-wing political project, declaring on their website that they are “proud to support candidates, political parties, political action committees, and political organizations as they seek to build power for progressive change.”
Why it’s dangerous
Backers of the firearm retailer MCC have made clear that their goal is to use the code to enact further gun control through a public-private partnership. Amalgamated Bank noted that they intend to create a software algorithm that will use the MCC “to report suspicious activity and illegal gun sales to authorities.” The contours of what would be deemed “suspicious activity” have not been articulated. As those purchasing firearms from retail establishments already undergo an FBI National Instant Criminal Background Check System (NICS) check, such “suspicious activity” would be aimed at otherwise lawful gun sales.
Describing how the gun control scheme would interface with the federal government, the New York Times explained, “Banks could then either allow [the flagged] transactions, or block them and file suspicious activity reports with the Treasury Department’s Financial Crimes Enforcement Network, which would ideally also create a system to quickly forward that information to local law enforcement and the F.B.I.”
Collecting firearm retailer financial transaction data amounts to surveillance and registration of law-abiding gun owners. Those promoting this scheme are proponents of firearm and gun owner registration and advocate against firearm owners’ privacy. Therefore, it should be assumed that the goal of this program is to share all collected firearm retailer MCC data with government authorities and potentially private third parties that may include gun control organizations and anti-gun researchers.
Federal law contains multiple restrictions on the creation of a national firearms registry and the creation of this MCC should be perceived as an attempt to circumvent those restrictions. The threat posed by firearm registration is greater than ever, as President Joe Biden and Vice President Kamala Harris have both advocated gun confiscation.
Further, this scheme offers a means by which to restrict and surveil those who exercise their First Amendment rights in a manner gun control advocates or the federal government disapprove. Everytown for Gun Safety President John Feinblatt explained, “Banks should report dangerous warning signs to law enforcement when extremists are quickly building up massive stockpiles of guns.” On September 1, 2022 President Joe Biden defined “extremism” to include “Donald Trump and the MAGA Republicans.”
State legislation to defend Second Amendment rights
In the first half of 2023, several states enacted legislation prohibiting or discouraging use of the firearm retailer MCC.
March 11, West Virginia Gov. Jim Justice signed HB 2004.
April 5, Idaho Gov. Brad Little signed HB 295.
April 13, Mississippi Gov. Tate Reeves signed HB 1110.
April 29, North Dakota Gov. Doug Burgum signed HB 1487.
May 12, Florida Gov. Ron DeSantis signed SB 214.
May 19, Montana Gov. Greg Gianforte signed SB 359.
June 10, Texas Gov. Greg Abbott signed HB 2837.
The contours of these bills vary, but the legislation typically prohibits financial institutions from requiring firearm retailers to use a specific MCC. This preserves the pre-September 2022 status quo.
For Instance, Texas law provides,
A financial institution or its agent may not require the usage of the firearms code in a way that distinguishes a firearms retailer physically located in the state of Texas from Texas general merchandise retailers or sporting goods retailers.
The Texas law empowers the attorney general to investigate financial institutions suspected of being in violation of the MCC restriction and provides for civil penalties on those who continue in their illegal course of conduct. Further, those impacted by a financial institution’s MCC violations may bring a private right of action to obtain equitable relief.
West Virginia went further. The Mountain State empowers customers and merchants to bring a civil action for damages against entities that misuse the firearm retailer MCC. Successful plaintiffs are entitled to recover liquidated damages or actual damages, whichever is greater.
The fight’s not over
While lawmakers in states like Florida and Texas have been hard at work defending the rights of law-abiding gun owners, anti-gun lawmakers in some jurisdictions are still attempting to leverage the firearm retailer MCC to attack the Second Amendment.
In California, AB-1587 is working its way through the state legislature. The bill would require financial institutions to “assign to a firearms merchant the merchant category code for firearms and ammunition businesses established by the International Organization for Standardization on September 9, 2022.” The term “firearm merchant” is defined to include those selling merely firearm accessories or ammunition.
As anti-gun jurisdictions attempt to force the firearm retailer MCC on law-abiding gun owners and retailers, Second Amendment supporters must remain vigilant. Early victories against this gun control scheme have demonstrated the capability of dedicated gun rights activists, but future battles on this front will require no less determination.