Skrmetti warns credit card companies about firearm purchase codes

Rep. Rusty Grills, R-Newbern, explains a bill to prevent credit card companies from using a separate code for purchases at firearms retailers in the state. ©State of Tennessee

(The Center Square) – Tennessee's Attorney General sent a letter Thursday to the nation's leading credit card companies warning them to follow a state law designed to prevent them from using a separate code to designate sales at firearms retailers.

The Tennessee Second Amendment Financial Privacy Act goes into effect July 1. Attorney General Jonathan Skrmetti said he was worried about the companies' plans to comply with the new state law.

"I am concerned that your compliance efforts are not sufficient and will allow you and other financial institutions to continue to utilize impermissible codes in violation of Tennessee law," he wrote in the letter.

In 2022, the International Organization for Standardization, based in Europe, voted to create a Merchant Category Code for firearm retailers to use when processing credit and debit card transactions. A MCC is a four-digit category code that classifies the type of business a retailer operates.

"This proposal came from American activists and politicians attempting an international end-run around our legislative process after their initial efforts failed to pass," Skrmetti wrote. "As participants in the ISO policymaking process, your companies could have opposed this move, but you did not. The complications you now face flow directly from this cheerful acquiescence to the politicization of what should be a neutral financial infrastructure."

State lawmakers passed the Tennessee Second Amendment Financial Privacy Act with the support of gun rights groups earlier this year. The law prohibits financial institutions from requiring the use of a firearm code. It also prohibits discrimination against a firearm retailer and prohibits keeping any list, record or registry of private firearm ownership.

In April, state Rep. Rusty Grills, R-Newbern, said the concern with an MCC for gun retailers was that merchants could then identify those purchases as suspicious, leading to search warrants, questions and unauthorized surveillance.

Skrmetti vowed to take violations of state law into account.

"Your failure to prevent the use of the firearms MCC on your payment networks in Tennessee risks violating state law," Skrmetti wrote. "In such circumstances, I will not hesitate to exercise the full scope of my authority to enforce the law duly enacted by the elected representatives of the people of Tennessee."

The bill makes a violation of the merchant code ban up to a $10,000 civil penalty that results in an investigation from the attorney general.