On September 30, 11 Democratic attorneys general (AGs), led by the AGs of the District of Columbia, New Jersey, and Delaware, sent a letter in support of major credit card companies Visa, Mastercard, and American Express adopting a new merchant category code for the sale of firearms. The letter from leading Democratic AGs follows a letter from two dozen Republican AGs to the credit card companies, opposing the adoption of the merchant code.
The Democratic AGs’ letter told the companies they “applaud [their] leadership in assisting us to keep our states and country safe.” While the Republican AGs letter raised concerns over protecting consumers constitutional rights and privacy, the Democratic letter focuses on safety and curbing gun violence. The Democratic AGs’ letter called gun violence a “national crisis,” asserting that there have been “500 mass shootings in 2022 alone.” Further, the AGs note that mass shootings have “exposed significant gaps in the systems in place to prevent mass casualty events.” They argue that the new merchant gun code would begin to fill one of those gaps by offering an additional tool for local, state, and federal law enforcement to use to thwart gun violence before it occurs. The letter also asserts that four recent mass shootings involved the purchase of firearms, ammunition, and gear from retailers whose transactions would have been covered by the new code.
Democratic AGs identified four primary ways they believe the new merchant code would curb illegal firearms sales:
(1) The code would increase the likelihood of producing actionable information to fill gaps caused by consumer and retailer noncompliance with multiple sales reports by providing sales information from financial institutions to law enforcement agencies;
(2) The code would enable financial institutions to track multiple sales to an individual who seeks to skirt the threshold for reporting purchases by purchasing firearms at multiple outlets;
(3) Financial institutions and law enforcement can analyze transaction patterns associated with mass shootings by individuals who have rapidly acquired weapons and large caches of ammunition; and
(4) The code would supplement state-enacted red flag laws to curb domestic terrorism and keep communities safe.
Importantly, the letter sought to address the Republican AGs concerns that the adoption of a new merchant category code could threaten lawful firearms purchases. Democratic AGs emphasized that the new code is aimed at preventing mass shooting — not preventing lawful activity “where responsible gun owners exercise their Second Amendment Rights.” Consumers can still purchase firearms legally, and the new code is “merely an administrative tool to gather data that would enhance law enforcement’s ability to do its job.” The letter calls assertions that the code would create a chilling effect “nothing more than political fearmongering.”
The Democratic AGs further argued that consumer privacy and data collection would be protected, pointing out that codes are commonly used to identify other categories of consumer transactions, without raising concerns among consumers.
Support for this merchant code is part of a broader effort among Democratic AGs to address gun violence. As mentioned in a recent press release by D.C. Attorney General Karl Racine, in July and August 2022, a coalition of 20 AGs filed briefs in support of a new federal rule, requiring serialization of weapon parts and background checks on those purchases.
The new merchant code caught the eye of regulators on both sides of the aisle, with different views offered by both parties. The positions of the two sides highlight the tension between consumer privacy and constitutional protections on the one hand and public safety and effective law enforcement on the other. As this merchant code goes into effect, it is important to look out for increased regulatory scrutiny and potential legal challenges.