In 2011 the Obama administration unleashed Operation Choke Point to use informal regulatory pressure on banks to debank the firearms industry, but that plan withered when exposed in congressional hearings. A few years later, the gun prevention lobbies convinced several states to mandate separate merchant category codes (MCCs) for stores that sell firearms; unfortunately for this initiative, the number of states with statutes that (opens in a new tab)forbid special MCCs for such stores far exceeds the number of states that mandate them. Today, the gun prevention movement is receiving an unexpected gift from merchant lobbies who are pushing to embed sophisticated surveillance infrastructure into the basic architecture of electronic commerce. With that architecture in place, the government will be able to track every item purchased with a credit card — firearms and everything else. The surveillance scheme emerges as an unintended consequence of superficially appealing legislation — namely state-level interchange fee laws — which are promoted as being aimed at helping waitresses, waiters, and small mom-and-pop shops.
This post first describes Operation Choke Point, then its replacement by Merchant Category Codes(MCCs) tracking, and finally the new program for comprehensive surveillance of all purchases. The first two matters are described in my Dickinson Law Review article Big Business as Gun Control, and in my recent post summarizing the article. This post is coauthored with Kristian Stout, who is Director of Innovation Policy at the International Center for Law & Economics, a public policy research organization whose "work is dedicated to the memory"of the famous Law and Economics scholars Armen Alchian and Henry G. Manne.
The first state-level interchange fee statute was enacted in Illinois in June 2024. In the state legislatures, based on who's lobbying for what, the battles over interchange bills often appears as credit card companies versus big box stores, with pro-waitress and pro-small business lobbies chiming in to support the big box stores. But this framing ignores the enormous privacy implications for everyone who uses a credit card: namely forcing credit card companies to make records of the items purchased in every transaction.
