States aiming to protect consumers’ financial privacy when buying guns, ammo

States are lining up to pass legislation that prevents the government from invading financial privacy when consumers purchase firearms and ammunition from retailers.

These laws prohibit financial institutions from requiring the use of a firearm code, called a Merchant Category Code, for gun and ammo purchases at retailers when using a credit card.

Florida, Idaho, Mississippi, Montana, North Dakota, Texas and West Virginia legislatures passed these bills last year when Amalgamated Bank sought the firearm-retailer-specific MCC. 

Those states also leaped to pass legislation this year when GOP lawmakers in January showed that the U.S. Treasury’s Financial Crimes Enforcement Network spied on Americans’ gun purchases through the MCC.

FinCEN’s policing of financial transactions is intended to combat terrorist money laundering.

Kentucky is the latest state to pass a law prohibiting keeping or causing to be kept any list, record or registry of private firearm ownership.

Second Amendment advocates who lobby to ensure the government isn’t targeting firearm owners or businesses selling guns hailed the legislation.

“Kentucky’s lawmakers are showing their citizens what leadership in action looks like by protecting their privacy and preventing woke Wall Street from colluding with government to target them for exercising their Second Amendment rights,” said Lawrence Keane, National Shooting Sports Foundation senior vice president.

On the federal level, House GOP Conference Chairwoman Elise Stefanik of New York proposed similar legislation in February that is still in committee.

Some Democratic states, namely California and Colorado, have moved in the other direction.

California Gov. Gavin Newsom signed a law requiring the use of a firearm-retailer-specific MCC. Colorado is considering similar legislation.

The idea of a firearm-retailer-specific MCC sprang from New York Times columnist Andrew Ross Sorkin, who suggested it in 2018 following the Parkland, Florida, mass shooting. He wrote that banks and credit card companies should create the code for gun-related transactions at stores that sell firearms.

His proposal suggested cutting off gun purchases by throttling the use of credit cards. Gun control advocates and Democratic lawmakers in the House and Senate embraced the idea.

In 2022, Amalgamated Bank lobbied the Swiss-based International Organization for Standardization for the code’s creation.

More recently, GOP lawmakers on the House Financial Services Committee grilled Treasury Secretary Janet Yellen over whether the department spied on consumers’ purchases.

The House Judiciary Committee’s Select Subcommittee on the Weaponization of the Federal Government in January revealed that the federal government flagged terms like “MAGA” and “Trump” for financial institutions if Americans use those phrases when completing transactions.

GOP lawmakers on the panel said individuals who shopped at retailers such as Cabela’s and Dick’s Sporting Goods or bought religious texts such as the Bible may also have had their transactions flagged.

Sen. Tim Scott, South Carolina Republican, sent a letter to Ms. Yellen in January stating that if those allegations about FinCEN were true, they “represent a flagrant violation of Americans’ privacy and the improper targeting of U.S. citizens for exercising their constitutional rights without due process. 

“Further, these instructions allegedly recommended financial institutions search Zelle payment messages for politically charged terms, such as ‘Trump’ and ‘MAGA,’ as well as transactions that could indicate the legal purchase of a firearm, such as transactions with a MCC for ‘Sporting and Recreational Goods and Supplies.’”

The Biden administration confirmed in a February letter to Mr. Scott that “MAGA,” “Trump” and “Kamala” were terms included by federal investigators for banks to surveil private financial transactions following the Jan. 6, 2021, protests at the U.S. Capitol.

The letter, signed by acting Assistant Treasury Secretary Corey Tellez, to Mr. Scott, the top Republican on the Senate Banking Committee, said the surveillance by FinCEN “began shortly after January 6 under the prior administration [and] included terms such as ‘antifa,’ ‘MAGA,’ ‘Trump,’ ‘Biden,’ ‘Kamala,’ ‘Schumer’ and ‘Pelosi.’”