MONTGOMERY, Ala. (April 8, 2024) – Two bills filed in the Alabama House and Senate would prohibit financial institutions operating in the state from using a credit card merchant code that would enable the tracking of firearm and ammunition purchases.
Rep. Shane Stringer introduced House Bill 389 (HB389) on April 2, and Sen. Tim Melson introduced Senate Bill 281 (SB281) on April 4. Titled the “Second Amendment Financial Privacy Act,” the bills would prohibit a financial institution operating in Alabama from “requiring merchants to use a merchant category code (MCC) to distinguish a firearms retailer from a general merchandise retailer or a sporting goods retailer during a firearms transaction amounting to financial surveillance and from disclosing financial information regarding the transaction.”
Under the proposed law, a financial institution could only disclose “protected financial information” if they get written authorization from the customer or if a court-issued subpoena requires disclosure.
The bills would prohibit both public and private entities from “keeping any record of privately owned firearms or registry of the owner of those firearms.”
Under both bills, the State Attorney General would be authorized to investigate alleged infractions. Those found guilty in court of violating the law would be subject to a civil penalty of no more than $10,000 per infraction. In enacted, both bills would take effect in October.
The legislation would also bar retailers in the state from voluntarily providing a firearms code to a payment card issuer or payment network, and they could only legally use or assign a merchant category code for general merchandise retailers or sporting goods retailers.
IN EFFECT
In response to legislation like HB389/SB281 the major credit card payment networks have “paused” implementation of the firearms merchant code. In an email to Reuters, a Mastercard representative said such bills would cause “inconsistency” in how the code could be applied by merchants, banks, and payment networks.
In September 2022, the International Standards Organization, based in Switzerland, approved a new merchant category code for firearm and ammunition merchants. In the letter to payment card networks, federal lawmakers stated that the new Merchant Category Code for firearms retailers 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,” expressing a clear government expectation that networks will utilize the new Merchant Category Code to conduct mass surveillance of constitutionally protected firearms and ammunition purchases in cooperation with law enforcement.
The more states that ban such codes, the more likely this program gets scrapped permanently.
IMPACT ON FEDERAL PROGRAMS
Concern about the misuse of firearms databases isn’t just paranoia. The Taliban has reportedly used a firearm ownership database created by the U.S. government to track down gun owners and confiscate firearms in Afghanistan. This goes to show that even if you trust the people creating the database, it can fall into the wrong hands. In other words, the very existence of a database is a danger.
The feds can share and tap into vast amounts of information gathered at the state and local level through fusion centers and a system known as the “information sharing environment” or ISE.
Fusion centers were sold as a tool to combat terrorism, but that is not how they are being used. The ACLU pointed to a bipartisan congressional report demonstrating the true nature of government fusion centers: “They haven’t contributed anything meaningful to counterterrorism efforts. Instead, they have largely served as police surveillance and information sharing nodes for law enforcement efforts targeting the frequent subjects of police attention: Black and brown people, immigrants, dissidents, and the poor.”
Fusion centers operate within the broader ISE. According to its website, the ISE “provides analysts, operators, and investigators with information needed to enhance national security. These analysts, operators, and investigators…have mission needs to collaborate and share information with each other and with private sector partners and our foreign allies.” In other words, ISE serves as a conduit for the sharing of information gathered without a warrant. Known ISE partners include the Office of Director of National Intelligence which oversees 17 federal agencies and organizations, including the NSA. ISE utilizes these partnerships to collect and share data on the millions of unwitting people they track.
In practice, local data collection using ALPRs, stingrays, drones and other spy technologies create the potential for the federal government to obtain and store information on millions of Americans including phone calls, emails, web browsing history, location history, and text messages, all with no warrant, no probable cause, and without the people even knowing it.
In a nutshell, without state and local assistance, the feds have a much more difficult time gathering information. When the state limits surveillance and data collection, it means less information the feds can tap into. This represents a major blow to the surveillance state and a win for privacy.
WHAT’S NEXT
SB281 has been referred to the Senate Committee on Banking and Insurance, while HB389 has been referred to the House Public Safety and Homeland Security Committee. Both bills will need to receive a public hearing and a majority vote of committee members before they can advance through the legislative process.
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