The Florida Legislature has started hearings on Senate Bill 214, a measure that would ban flagging unusual gun purchases made with credit cards.
But before I tell you why you should care about that bill, let me tell you about this photograph some friends took of me on vacation. It's become somewhat of a running joke because they say I look like I'm for hire. In the photo, I'm smiling, sweaty and shirtless, next to an ATM in Mexico. The truth is I was there waiting for the bank to reactivate my card. I had forgotten to inform my financial institution of my travel plans, and so my transactions abroad were flagged and my card frozen.
I'm sure some of you must have experienced something similar — you go out with friends to a new bar or you make a string of unusual purchases, and the next thing you know you're chatting with your bank's fraud department.
It's annoying, but the Patriot Act doesn't care.
Financial institutions are required by law to notice if customers do something out of the norm, and sometimes to report those aberrations to the authorities. The government's goal is to spot terrorist activity and money laundering. Banks get a side benefit by detecting fraud quickly and minimizing losses.
Whatever the goal, in order to tell when we're doing something out of the norm, banks are required by law to know what our norm is. It's a standard called "know your customer," and yes, it feels a bit creepy. Yet the reality is that as a society we accepted surveillance as a part of commerce long before "know your customer." How else would we receive reward points or frequent flier miles if not for someone else keeping tabs on our spending?
While the Patriot Act was testing the boundaries of national security with that monitoring requirement back in 2001, the next development came from the Internal Revenue Service. In 2004 the IRS mandated that credit and debit card transactions be tagged with merchant category codes, which could be used to flag whether a given transaction needed to be reported to the government as potentially taxable income. The codes are four-digit numbers assigned by financial institutions using a system maintained by the International Organization for Standardization and updated every five years.
Last fall, after years of pressure from Democrats and gun control advocates, the International Organization for Standardization created a merchant code specifically for gun retailers.
Predictably, Republicans didn't like that this new code existed. Rep. Elise Stefanik, R-N.Y., immediately called the decision "unconstitutional," and conservative lawmakers in at least four states introduced legislation to ban use of the code — Oklahoma, Mississippi, West Virginia and the Sunshine State.
That Florida would join this crowd is particularly disappointing. Had a gun merchant code existed in 2016, credit card companies could have flagged Omar Mateen, the Pulse nightclub shooter, who used his cards to purchase nearly $20,000 worth of weaponry in less than two weeks before the shooting. Mateen even searched Google for "credit card unusual spending" two days before the Orlando attack, seemingly expecting to be flagged for suspicious activity.
As he should have been. Now, with a code to identify retail gun sales, perhaps the next would-be mass shooter will be flagged. The Patriot Act requires banks to tell the authorities if someone might be sending money to a terrorist group, but financial companies would have to decide to report that a mass shooting might be brewing.
The National Rifle Assn. objected preemptively, saying the decision was "nothing more than a capitulation to anti-gun politicians and activists bent on eroding the rights of law-abiding Americans one transaction at a time." It's important to remember that merchant codes show the type of business at which a purchase was made, not what was purchased. So rhetoric about merchant codes becoming a national gun registry is hyperbolic.
And in any case, not every transaction is of interest. Since financial institutions are required to monitor us anyway, surely we can all agree that some transactions really do warrant a second look — not just to stop fraud but also to save lives.
In a 2018 analysis of credit card usage in mass shootings, the New York Times reported that "there have been 13 shootings that killed 10 or more people in the last decade, and in at least eight of them, the killers financed their attacks using credit cards. Some used credit to acquire firearms they could not otherwise have afforded. Those eight shootings killed 217 people."
Those numbers need to be part of Florida's deliberations about SB 214 as well.
"There is a misunderstanding that the financial services industry will somehow change support of legal gun purchases, and we don't have the ability or industry to do so," said Priscilla Sims Brown, president and chief executive of Amalgamated Bank. It is Brown's financial institution that requested the standards organization for a merchant category code to identify gun sellers.
For her efforts, Brown received a spirited letter from House Republicans last fall accusing Amalgamated Bank of trying "to force a divisive, progressive policy onto the entire American financial system." The letter also accused the standards organization of caving "to immense far-left political pressure" and asked Brown a series of questions, including some that could be answered by reading Section 326 of the Patriot Act.
The question I have is how did an industry as large and as profitable and as omnipresent as gun retail manage not to receive a code until now. Feels purposeful. I'm sure that's probably just me.
"There are thousands of codes," Brown said. "It's not an unusual thing. It's not a radical thing. No one has been concerned about merchant codes. No one put up a fight for merchant codes being set up for libraries or media entities or other forms of organizations where rights are protected."
In fact, if gun and ammo purchases are a normal part of your life, the bank is already aware of that and the "know your customer" standard doesn't kick in. But when Stephen Paddock used credit cards to buy close to $100,000 worth of firearms and weaponry before he killed 60 people in Las Vegas in 2017, that was out of character. If there had been a merchant code for gun retailers then, financial companies could have seen just how worrying that spending spree was.
Those numbers also need to be part of the discussion about SB 214, because those numbers are the real reason we're even having this conversation.
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