Clare Hymes and Alyssa Spady, CBS
A group of congressional Democrats is urging credit card companies to track suspect firearm and ammunition purchases as a means to identify and stop gun crime, according to a letter obtained by CBS News Thursday.
The letter, drafted by Sen. Elizabeth Warren of Massachusetts and Rep. Madeleine Dean of Pennsylvania and signed by over a dozen of their colleagues, urges the CEOs of Mastercard, American Express and Visa to back the creation of a merchant category code for gun and ammunition retailers — a measure the industry had initially resisted, according to an investigation by CBS News in June.
"The creation of a new [merchant category code] for gun and ammunition retail stores would be the first step towards facilitating the collection of valuable financial data that could help law enforcement in countering the financing of terrorism efforts," the letter says.
A merchant category code, they wrote, "could make it easier for financial institutions to monitor certain types of suspicious activities including straw purchases and unlawful bulk purchases that could be used in the commission of domestic terrorist acts or gun trafficking schemes."
New York-based Amalgamated Bank launched the effort to create a code to track firearms and ammunition sales in July 2021. They renewed the push after a series of deadly mass shootings in which young men used high-powered weapons purchased with credit cards.
Merchant category codes are made up of four digits and are used across all sorts of industries as a means to classify retailers, while not revealing individual product purchases. Local shoe shine parlors have their own unique code, while the nearly 9,000 standalone U.S. gun sellers do not. Credit card companies currently lump firearm retailers in with other outlets, classifying them as either "5999: Miscellaneous retail stores" or "5941: Sporting Goods Stores."
Amalgamated Bank's application to create a code was twice denied by the International Standards Organization, which sets standards across the financial services industry and assigns the merchant category codes. Documents reviewed by CBS News show that credit card industry employees were part of an internal committee within the organization that recommended rejecting the application.
Amalgamated decided to appeal the organization's initial rejection decision after seeking further input from the card company employees.
"Specific MCC [codes] in narrow retails [sic] areas are challenging," wrote an employee from American Express. "Managing long lists of narrowly defined MCCs can become burdensome if there isn't a compelling reason for the long list."
In February, the International Standards Organization denied Amalgamated's appeal. In an email, the bank was told a new code for gun and ammunition sellers would fail to capture "the sales at sporting goods stores" and, at the same time, would place 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 from those companies only advised the committee, were serving in a 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.
In late June, the bank applied again for the merchant category code and has yet to hear back on the renewed application.
In their letters to American Express, Visa and Mastercard, Warren and Dean asked each company for their current stance on the code's creation. They further inquired about the role each credit card company had in "supporting, opposing, or delaying" the process as industry representatives on the standards organization committee that reviews applications for new merchant category codes.
Mastercard said in a statement to CBS News that it was reviewing the proposal and how it could be implemented and managed by banks in its network. "This will help us continue to deliver a payments system that supports all legal purchases while protecting the privacy and decisions of individual cardholders," said Scott Eisen, senior vice president of communications at Mastercard.
CBS News has also reached out to representatives from Visa and American Express and is awaiting response.
Amalgamated was founded by union workers nearly 100 years ago and bills itself as the nation's oldest socially responsible bank.
"Everyone has a responsibility to do what they can to stop gun violence. As a bank, it is our right and responsibility to report the use of the financial system to fuel black market gun sales and sales associated with mass shootings," said Priscila Sims Brown, president and CEO of Amalgamated Bank.
"Issuing a merchant category code for gun sellers will allow us to do that, and we are confident that our pending application will be successful if Visa, Mastercard, and American Express follow their process for creating new codes. We are grateful to Senator Warren and Representative Dean for joining our call on industry to adopt this common sense approach to stopping gun violence."
Supporters say such a code could be a useful tool to help law enforcement identify bad actors by spotlighting potentially suspicious purchasing patterns, and they note that a number of notorious mass shootings were financed with credit cards.
The shooter who terrorized a Colorado movie theater in 2012 charged more than $9,000 worth of guns, ammunition and tactical gear in the two months leading up to his attack, which killed 12 people and injured 70. The man who shot up the Pulse Nightclub in Orlando, killing 49 people, put more than $26,000 on credit cards on firearms and ammunition. And the shooter who killed 59 at a music festival in Las Vegas in 2017 charged almost $95,000 on dozens of guns.
With a unique code for firearm and ammunition sellers, the bank says it would be able to run software to detect suspicious purchases, much in the same way it detects evidence of other suspicious activity and malicious patterns of behavior, like fraud and human trafficking.
Amalgamated said it could then file what's called a suspicious activity report with law enforcement to flag things like large purchases from multiple shops that could be intended for the black market, or possible straw purchases, which is when someone buys a weapon for another person who isn't legally allowed to have one.
Banks and credit unions made more than 1.4 million suspicious activity reports in 2021, flagging transactions that might suggest anything from identity theft to terrorist financing.
Pressure continues to mount from outside groups petitioning the industry for their backing. On Tuesday, New York City Mayor Eric Adams, along with the city's Comptroller Brad Lander, pension trustees and other elected officials, also called on the three major credit card companies to support establishment of a new unique code for firearms sellers.
"When it comes to guns falling into the wrong hands, we must find upstream solutions before we're faced with downstream consequences — because downstream consequences are lost lives," Adams said. "When you buy an airline ticket or pay for your groceries, your credit card company has a special code for those retailers. It's just commonsense that we have the same policies in place for gun and ammunition stores."
The city's push comes after 50 New York state legislators sent a letter to Mastercard and American Express urging their support for the merchant category code.
The increased pressure on the credit card companies also comes ahead of the standards organization's fall meeting, where the fate of Amalgamated's second application will be decided. The ISO did not immediately return requests for comment.
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