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New way to track suspicious arms and ammunition sales by credit card approved by international organization

Credit card industry officials have paved the way for a new way to track gun and ammunition purchases, a move that supporters say will help flag suspicious sales and reduce crime related to firearms.

The International Organization for Standardization, which sets rules across the financial services industry, agreed to create a new merchant category code for firearms and ammunition retailers at a meeting this week , and announced the decision on Friday. The decision came amid mounting pressure on credit card companies by Democrats in Congress who called for the code to be created.

Merchant category codes consist of four digits and are used in all kinds of industries as a means of classifying retailers, without revealing individual product purchases. Credit card companies currently group gun retailers with other outlets, classifying them as “5999: Miscellaneous Retail Stores” or “5941: Sporting Goods Stores”.

With a new code for gun dealers, potentially suspicious buying habits could be reported to law enforcement – the same way banks and credit unions have made more than 1.4 million of suspicious activity reports in 2021 for other types of transactions that could suggest anything from identity theft to terrorist financing.

Proponents believe the code could be a useful tool to help law enforcement identify bad actors, pointing to a number of notorious mass shootings funded by credit cards.

The shooter who terrorized a Colorado Cinema in 2012, he charged more than $9,000 worth of firearms, ammunition and tactical gear in the two months before his attack, which killed 12 people and injured 70. The man who shot the Pulse Nightclub in Orlando, killing 49 people, put more than $26,000 on credit cards on guns and ammunition. And the shooter who killed 59 people in a music festival in las vegas in 2017, they billed nearly $95,000 on dozens of guns.

Mastercard, American Express and Visa initially resisted creating a merchant category code for gun and ammunition retailers according to a CBS News investigation in June. Watch this report in the video below:

How the credit card industry blocked efforts to track suspicious arms sales


The directorate responsible for financial services at the International Organization for Standardization approved the request for the code after a committee, which includes representatives from the major credit card companies, failed to reach an agreement. topic.

Visa had expressed concerns about the proposal. In a letter obtained by CBS News, sent by Visa on Wednesday in response to congressional Democrats who supported the plan, the company said, “We believe that asking payment networks to serve as a moral authority in deciding what legal assets can or cannot be purchased sets a dangerous precedent.”

Visa wrote: “We understand that Amalgamated Bank’s request was justified, at least in part, by an interest in blocking transactions that would fall into such a new category, and Visa’s rules expressly prohibit the blocking of transactions legal under an MCC.”

Once the code is approved, Mastercard said in a statement to CBS News, “We are now focused on how it will be implemented by merchants and their banks as we continue to support legal purchases on our network while protecting the privacy and decisions of individual cardholders. . This is exactly how we would handle the process for any other appropriate MCC, such as a bike shop or sporting goods store.”

American Express told CBS News: “It is important to note that the MCC codes are one of many data points that help us understand the industries in which our merchants operate. We strive to ensure that we have the good controls in place to meet our regulatory and fiduciary responsibilities, as well as preventing illegal activity on our network.”

New York-based Amalgamated Bank began creating a code to track gun and ammunition sales in July 2021. They renewed the effort after a series of deadly mass shootings in which young men used high-powered weapons purchased with credit cards.

Amalgamated was founded by unionized workers nearly 100 years ago and bills itself as the nation’s oldest socially responsible bank.

“We must all do our part to end gun violence,” said Priscilla Sims Brown, president and CEO of Amalgamated Bank. “And that sometimes starts with illegal arms and ammunition purchases. The new code will enable us to fully comply with our obligation to report suspicious activity and illegal arms sales to authorities without blocking or impeding legal sales of weapons. This action answers the call of millions of Americans who want to be free from gun violence and we are proud to have led the broad coalition of advocates, shareholders and elected officials who achieved this historic result.”

Amalgamated Bank’s request to create a code has twice been rejected by the International Organization for Standardization. Documents reviewed by CBS News show that credit card industry employees were part of an internal committee within the organization that had previously recommended denying the application.

“MCC specific [codes] in narrow shops [sic] are difficult,” wrote an American Express employee. “Managing long lists of tightly defined MCCs can become tedious if there is no compelling reason for the long list.

In February, the International Organization for Standardization rejected Amalgamated’s appeal. In an email, the bank was told that a new code for gun and ammunition sellers would fail to capture “sales at sporting goods stores” and, at the same time, would impose a “burden” on small retailers.

In June, the organization told CBS News that the credit card companies were not responsible for the decision and that employees of those companies were merely advising the committee, serving in their personal capacity and “do not represent the views of their employer”. Those who pushed to reject Amalgamated’s application did so “based on their expertise”, the organization said.

At the end of June, the bank again asked for the merchant category code.

Although the application has been approved, a code value has not yet been assigned to the new merchant category internationally, but the bank is calling for rapid implementation among credit card companies that generally follow the standards.

A group of lawmakers led by Senator Elizabeth Warren and Rep. Madeleine Dean letters sent to American Express, Visa and Mastercard on September 1, asking each company for its current position on the creation of the code. They further inquired about each credit card company’s role in “supporting, opposing or delaying” the process as industry representatives on the standards organization’s committee that reviews applications. new merchant category codes.

“This approval is an important step toward improving coordination with law enforcement and preventing gun violence,” Sen. Elizabeth Warren told CBS News in a statement. “For this new merchant code to be maximally effective, every financial institution and payment system must step up and use it.”