Credit-Card Companies Explore New Ways To Monitor Gun Purchases

Following the deadly Valentine's Day shooting in Parkland, Fla., banks and credit card companies considered blocking consumers' gun purchases as corporate America engaged in a marathon virtue-signaling session to prove to their customers that they too care about the lives of students being endangered by gun violence.

Of course, these bans would've likely been temporary. Banks could've quietly withdrawn the restrictions once the public furor quieted down. However, some banks and credit card companies are now considering a more permanent move that would transform them into foot soldiers in the deep state's push to create a register of all gun owners. The Wall Street Journal reported Monday that some lenders are now discussing ways to identify purchases of guns through their payment systems. This would effectively transform them into tools of the intelligence services by monitoring virtually all gun sales at sporting goods stores and other merchants that aren't transacted in cash.

As WSJ explains, card networks like Visa and Mastercard can request approval for what's called a merchant category code - or MCC - a protocol that's governed by a Switzerland-based nonprofit. The code can be applied to gun merchants so that banks can flag new gun purchases using their credit cards.

The lenders are still discussing what types of merchants would receive the new code. Would it be all gun sellers? Or just sporting-goods merchants but not companies like Wal-Mart that primarily sell other products.

Guns

One bank has even had conversations with lawmakers about a bill to require merchants to report ALL purchases of certain "gun-related" products.

Currently, card companies, including networks and banks that issue credit cards, have little to no insight into gun purchases. Gun sellers fall into broader categories such as sporting-goods retailers or specialty retail shops. Big-box retailers that also sell guns are often assigned codes that include "variety" or "discount" stores.

An area of discussion, according to the people familiar with the talks: How far reaching a new MCC would be. This code could identify purchases made at gun dealers—but not at merchants that primarily sell other products, such as Walmart Inc.

Some talks have gone further. At least one large U.S. bank has had early conversations with lawmakers about potential legislation to require merchants to share information about specific gun-related products consumers are buying with their cards, according to people familiar with the matter.

As WSJ reminds us, banks have at times blocked purchases of certain items that they believed to be risky, or part of a legal gray area. They also act as the front-line of defense in monitoring payments for suspicious - possibly terrorism-related - activity. And in rare instances, banks have stopped doing business altogether with politically unpalatable groups like the government of South Africa during the apartheid era.

Citigroup has already started restricting purchases of guns using its credit cards to users over the age of 21 (because the last thing these banks want to see is the next mass murderer using a Citigroup-branded credit card to make a fatal purchase).

This would also open up a new can of worms, as banks would encounter similar problems to those facing Facebook, Twitter and other social media companies as they decide how they should handle all the sensitive user data they are collecting.

"A bank could say, 'We’re not going to do business with gun manufacturers,'" said Jeremy Stein, a former member of the Federal Reserve board of governors who currently is an economics professor at Harvard University. "But when it gets into using the information, you’re getting into the same issues Facebook and others had problems with."

A dividing line, he added, would be whether banks are monitoring transactions for criminality. "If it’s just a policy objective, even if I liked the policy objective, I’d think it’s worrisome," Mr. Stein added.

Divisions exist within the financial-services industry, which previously has resisted pressure to restrict purchases of controversial products such as tobacco.

"We don’t think it’s a good idea for banks to decide what products and services Americans can buy," Wells Fargo CEO Timothy Sloan said at the bank’s annual meeting last week. "It should not be up to me, to us, to decide that. It should be up to folks following the laws and folks making decisions."

Banks have experienced some political blowback as a result of their relationships with gun owners. The American Federation of Teachers announced it would cut ties with Wells Fargo & Co. over the bank's relationship with the National Rifle Association, as well as with several gun manufacturers.

But not as much as they would receive if they went ahead with the plan to flag all gun buys. With nearly half of Americans admitting to owning guns, we imagine most customers wouldn't take too kindly to their shopping habits being recorded and sent to the government.