Credit cards caught in political crosshairs over tracking firearms purchases

The world’s largest credit card companies are caught in the middle of a political slugfest over a newly created category that tracks purchases at gun stores.

Fourteen Democratic attorneys general called on Visa, Mastercard, Discover and American Express to stick to their original plan to implement a merchant category code for credit and debit card sales at gun shops. The new code was “paused” earlier this month under pressure from 24 Republican state prosecutors.

The Democratic attorneys general told the credit card giants that it was “clear that your about-face is the result of a handful of state legislative proposals threatening penalties, and amorphous veiled threats from certain state attorneys general.”

“First, these threats of incipient legislation and nebulous repercussions should not drive your conduct in this essential area,” the Democrats said in a March 16 letter. “Second, we do not believe that any state interest could justify a government prohibiting you from coding or analyzing your data that way. In this context, we fear you are setting a precedent that invites further threats and interference in lawful, protected business practices.”

Indeed, the Democratic attorneys general ended the letter by warning that “your complicity with ongoing needless gun tragedies will lead us to consider further actions,” meaning the companies may face litigation and legislation no matter what steps they take.

The credit card companies acknowledged the political tension in their March 9 statements about the pause.

“Today, there are bills advancing in several states related to the use of this new code,” Mastercard said. “If passed, the result will be an inconsistency in how this [International Organization for Standardization] standard could be applied by merchants, issuers, acquirers and networks. It’s for that reason that we have decided to pause work on the implementation of the firearms-specific MCC.”

The debate illustrates the corporate risks of adopting policies of left-wing advocacy groups that Republicans oppose.

On Sept. 10, days after the Swiss-based IOS voted to create the classification, the companies announced that they would implement the merchant category code.

Their vote was a response to an application from Amalgamated Bank of New York City, a union-owned institution that bills itself as a “socially responsible bank.” The IOS denied Amalgamated’s 2021 application.

Sen. Elizabeth Warren of Massachusetts was among the Democrats who urged credit card companies to support the merchant category code.

“Mass shooters have repeatedly financed deadly massacres using credit cards, and Bank CEOs need to step up to save lives,” Ms. Warren said in a Sept. 2 statement. “Financial institutions and payment networks, such as Visa, MasterCard, and American Express can and should do everything they can to help law enforcement prevent some mass shootings by identifying suspicious gun purchases through the implementation of this new code.”

Montana Attorney General Austin Knudsen led the Republican opposition. He warned that the code “creates a ‘list of gun buyers’ and creates the obvious risk that law-abiding consumers’ information will be obtained and misused by those who oppose Americans exercising their Second Amendment rights.”

Florida, Montana, West Virginia and Wyoming are among the states that introduced legislation barring or limiting credit card companies from monitoring purchases of guns, ammunition and accessories.

The Republican prosecutors said gun control activists pressured the IOS to adopt the code, creating “the potential for both civil and criminal liability for conspiracy to deprive Americans of their civil rights.”

“Social policy should be debated and determined within our political institutions,” the Republican prosecutors said in a Sept. 20 letter. “Americans are tired of seeing corporate leverage used to advance political goals that cannot muster basic democratic support.”

Mr. Knudsen later cheered the companies’ decision to place the code on hold and urged them to make the pause permanent.

“These major credit card companies came to the correct conclusion. However, they shouldn’t just ‘pause’ their implementation of this plan — they should end it definitively,” Mr. Knudsen said.

The Democratic prosecutors noted the numerous codes for common products such as groceries and flowers, as well as for “stamp shops, tent shops, wig shops, car rental places, and various government services.”

“Exempting firearm purchases from such a basic accounting will only make it harder to intercept and disrupt the next mass shooting,” the Democrats said.