Congresswoman Dean and Senator Warren Urge Bank CEOs to Adopt New Code for Gun and Ammunition Retailers

Letter

Mr. Squeri,

We write to urge American Express to support the creation of a new merchant category code (MCC) for gun and ammunition retail outlets, and to seek answers to reports that the company has obstructed efforts to create such a category, which would be an important step towards ending financial system support for gun trafficking, gun violence, and domestic terrorism.

Since 2009, the United States has suffered 279 mass shootings causing 1,576 deaths. The shooters in at least five major mass shootings between 2007 and 2020 financed their massacres using credit cards. The shooter who killed 12 people at an Aurora, Colorado movie theater in 2012 charged $11,000 worth of guns, ammunition, and body armor to a Mastercard issued by USAA. A few years later, in 2017, the killer who massacred 60 people on the Las Vegas strip used credit cards to purchase guns and ammunition totaling nearly $95,000 in the 12 months preceding his attack. In Orlando, the Pulse nightclub shooter racked up more than $26,000 in credit card charges on guns and ammunition in the twelve days ahead of his killing spree that killed 49 people and wounded 53. Before he did so, however, the shooter ran several online searches to determine whether his "unusual spending" would be flagged by credit card companies and reported to police. It was not.

In 2018, the Wall Street Journal explored how banks and credit card companies could help law enforcement preempt some mass shootings by identifying suspicious gun purchases through the implementation of a new MCC. MCCs are four-digit codes maintained by the International Organization for Standardization (ISO) that classify merchants by their purpose of business. Financial institutions and payment networks, such as Visa, MasterCard, and American Express, use the ISO standard to assign MCCs to merchants in order to determine interchange rates, assess transaction risks, and generally categorize payments. MCC codes range from general to highly specific -- for example, while gun and ammunition retail outlets currently fall under "5999: Miscellaneous retail stores" or "5941: Sporting Goods Stores," electric razor stores, tent stores and leather goods stores all currently have a unique code.

The ISO sets forth criteria that the internal committee (Registration and Maintenance Management Group (RMMG)), which includes representatives from Mastercard, Visa, and American Express, must use when evaluating applications for new MCCs. Per the ISO's own guidelines, a new MCC may be approved if (a) the merchant category is reasonable and substantially different from all other merchant categories currently represented in the list of code values; (b) the merchant category is separate and distinct from all other industries currently represented in the list of code values; (c) the proposal describes a merchant category or industry, and not a process; (d) the minimum annual sales volume of merchants included in the merchant category, taken as a whole is, US$10 million; and (e) sufficient justification for the addition of a new code is found.

On July 6, 2021, Amalgamated Bank applied to ISO for a new category code for standalone gun
and ammunition retail stores, but their application was denied by the RMMG that October. Amalgamated then filed an appeal of its initial application on November 23, 2021, only to be denied again in February of 2022. On June 21, 2022, Amalgamated Bank once again applied to the ISO for a new MCC, and they have advised us of Mastercard, Visa, and American Express RMMG representatives' continued opposition to their application.

Amalgamated Bank's application for a new merchant category code meets all of the criteria established by the ISO. That is, gun and ammunition stores (a) are not currently represented in the ISO's current list of code values and a new code for such retailers would be substantially different from existing codes; (b) they compose a unique industry of distinct merchants specializing in the sale of a variety of guns, ammunition and firearm accessories; (c) and (d) are classified as merchants that specialize in selling guns and ammunition, and the over 6,500 businesses in this category brought in an estimated $15 billion in revenue in 2021; and (e) regulatory compliance obligations provide the requisite justification for the new code.

The creation of a new MCC 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. A new MCC code 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. Such coordination between financial institutions and law enforcement has been instrumental in efforts across the federal government to identify and prevent illicit activity.

Recent reports indicate that "domestic and international credit card companies, including … American Express … pushed back on an application to create a merchant category code for firearm and ammunition sellers." And in a statement provided to the press regarding the Amalgamated application, an American Express employee stated that "specific MCC in narrow retails areas are challenging …Managing long lists of narrowly defined MCCs can become burdensome if there isn't a compelling reason for the long list." We would argue that understanding and preventing the financing of gun trafficking, gun violence and domestic terrorism is a highly "compelling" reason to add a single new MCC to a list of hundreds. Based on our understanding that gun and ammunition retail outlets meet the criteria for a new MCC, as well as the potential uses of the MCC to prevent heinous crimes like domestic terrorism, we are disappointed that American Express is pushing back on the application.

To better understand American Express' stance on this issue, we ask that you submit a response
to the following questions by September 15, 2022:

(1) Press reports indicate that "domestic and international credit card companies, including American Express… pushed back on an application to create a merchant category code for firearm and ammunition sellers." Is this report accurate? What role, specifically, did American Express play with regard to supporting, opposing, or delaying the creation of a new MCC code for standalone firearm dealers?

(2) In light of American Express' statement in the CBS report about Amalgamated Bank's application, does American Express believe that the prevention of domestic terrorism is not a sufficiently compelling reason to justify any administrative work that may be required to create and implement the use of a new MCC?

(3) Does American Express support the creation of a new MCC for standalone firearm retailers? Please explain

(4) Does American Express believe that Amalgamated Bank's application for a new MCC fails to meet the criteria established by the ISO? If so, please elaborate on the inadequacies of the application and why American Express believes it does not meet the requisite criteria.