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New way to track suspect credit card sales of guns and ammo approved by international organization

Credit card industry representatives have cleared the way for a new means of tracking firearm and ammunition purchases, a move that supporters say will help flag suspicious sales and reduce gun crime.

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

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. Credit card companies currently lump firearm retailers in with other outlets, classifying them as either "5999: Miscellaneous retail stores" or "5941: Sporting Goods Stores."

With a new code for firearms merchants, potentially suspicious purchasing patterns could be flagged to law enforcement — much the same way banks and credit unions made more than 1.4 million suspicious activity reports in 2021 for other types of transactions that might suggest anything from identity theft to terrorist financing. 

Supporters believe the code could be a useful tool to help law enforcement identify bad actors, pointing to a number of notorious mass shootings that 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.

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

How the credit card industry blocked effort to track suspect gun sales 06:49

Leadership responsible for financial services within the International Standards Organization approved the application for the code after a committee, which includes representatives from the major credit card companies, failed to reach agreement on it.

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 by deciding which legal goods can or cannot be purchased sets a dangerous precedent." 

Visa wrote, "We understood Amalgamated Bank's request to be justified, at least in part, by an interest in blocking transactions that would fall under such a new category, and Visa's rules expressly prohibit blocking of legal transactions under an MCC."

With the code approved, Mastercard said in a statement to CBS News, "we now turn our focus to how it will be implemented by merchants and their banks as we continue to support lawful purchases on our network while protecting the privacy and decisions of individual cardholders. This is exactly how we would manage the process for any other appropriate MCC, like a bicycle shop or sporting goods store."

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

New York-based Amalgamated Bank first began the effort to create a code to track firearms and ammunition sales back 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.

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

"We all have to do our part to stop gun violence," said Priscilla Sims Brown, President and CEO of Amalgamated Bank. "And it sometimes starts with illegal purchases of guns and ammunition. The new code will allow us to fully comply with our duty to report suspicious activity and illegal gun sales to authorities without blocking or impeding legal gun sales. This action answers the call of millions of Americans who want safety from gun violence and we are proud to have led the broad coalition of advocates, shareholders, and elected officials that achieved this historic outcome."

Amalgamated Bank's application to create a code was twice denied by the International Standards Organization. Documents reviewed by CBS News show that credit card industry employees were part of an internal committee within the organization that previously recommended rejecting the application.

"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.

While the application has been approved, a code value has yet to be assigned to the new merchant category at the international level, but the bank is calling for swift implementation among the credit card companies who typically follow the standards.

A group of lawmakers led by Sen. Elizabeth Warren and Rep. Madeleine Dean sent letters to American Express, Visa and Mastercard on Sept. 1, asking 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.

"This approval is an important step towards improving coordination with law enforcement and preventing gun violence," Senator Elizabeth Warren told CBS News in a statement. "In order for this new merchant code to be maximally effective, every financial institution and payment system needs to step up and put it to use."

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