CUs Offer Mainly Muted Response to NY's Gun Push on Card Issuers

New York’s Office of the State Comptroller has asked Mastercard, Visa, JPMorgan Chase, Bank of America, Wells Fargo and other card issuers and processors to consider rejecting purchases of guns, ammunition and firearm accessories, calling attention to risks that card issuers may face for doing so.

CU Times reached out to a number of credit union organizations and, for now, they had little to say about the apparent growing trend of card issuers distancing themselves from gun-related purchases.

In the March 29 letter to Mastercard, for example, Comptroller Thomas P. DiNapoli noted that the state’s pension fund, of which he is a trustee, is a shareholder in Mastercard. DiNapoli said credit card companies were not immune from reputational risk and that the idea of financial institutions refusing to do business with retailers that sell assault weapons was gaining traction.

“Based on the Fund’s experience as a long-term investor, I believe that sustainable business practices — including responsible social practices — and the ability to mitigate reputational risk are hallmarks of a company with a sound, sustainable, and profitable long-term strategy,” the letter said. “If Mastercard continues to allow its services to be used for purchasing firearms and accessories — particularly if gun violence continues unabated in society — public outcry and calls for action may grow and create significant financial risk for the company.”

“As a long-term institutional investor in your company, I request that Mastercard assess the risks associated with its services being used in the purchase of firearms, ammunition and accessories, and explore the operational and financial cost of implementing a system that could reject the purchases of these items in order to ameliorate such risks,” it added.

Some card issuers have recently taken steps to distance themselves from the gun industry.

In an interview with Bloomberg Television on April 10, for example, Bank of America co-vice chairman Anne Finucane said the financial institution will stop lending to manufacturers of military-style weapons for civilian use.

Last month, Citigroup rolled out a new policy forbidding retailer clients from selling bump stocks or high-capacity magazines, selling guns to people under 21 years old or selling guns to people who haven’t passed background checks.

“We know our clients also care about these issues and we have begun to engage with them in the hope that they will adopt these best practices over the coming months. If they opt not to, we will respect their decision and work with them to transition their business away from Citi,” the company said.

In the days after news of the comptroller’s letters broke, CU Times asked several credit union leagues whether they’d heard of any credit union card issuers receiving similar requests to restrict gun-related purchases, whether they felt credit unions faced similar pressure to restrict gun-related purchases, and whether it was feasible or acceptable for credit union card issuers to implement gun-related card restrictions.

“We are aware of the comptroller’s letters that were sent to the heads of some of the nation’s largest banks, credit card companies and payments processors,” the New York Credit Union Association spokesperson said in a statement to CU Times.

“The letters were sent from his perspective as overseer of the state pension fund, which owns shares in these companies. To the best of our knowledge, no New York credit unions have been asked by any government official or agency to restrict transactions related to the legal sale of firearms or gun components. As an association, we have not taken a formal position on this, and it wouldn’t be appropriate for us to comment further,” the spokesperson added.

“We have not had this issue come up in Pennsylvania,” Pennsylvania Credit Union Association Senior Vice President Michael Wishnow said. “Neither has it come up from any regulators. If it would come up, we here in Pennsylvania would run it by our regulatory review committee made up of credit union professionals before taking a position on any such request.”

The League of Southeastern Credit Unions & Affiliates, the Mountain West Credit Union Association, the Illinois Credit Union Association and NAFCU had no comment.