California State Teachers’ Retirement System and New York City Retirement Systems officials called on credit card companies to help track gun and ammunition purchases as a way of detecting suspicious activity.
In letters sent to executives at American Express, Mastercard International and Visa, Aeisha Mastagni, portfolio manager for sustainable investment and stewardship strategies at the $311.7 billion West Sacramento-based CalSTRS, and Brad Lander, the city comptroller and fiduciary for the five pension funds in the $239.5 billion New York Retirement Systems, said the credit card firms have “a responsibility to prohibit the use of its network for illegal activity,” and that not doing so “can result in regulatory, reputational, and litigation risks that may harm long-term shareholder value.”
The investors want the companies to support a new merchant category code for gun and ammunition stores, similar to ones used for grocery stores, sporting goods stores and other retailers.
The letters call on the credit card companies to support a pending application by Amalgamated Bank to the International Organization for Standardization to establish a merchant category code for stand-alone gun and ammunition stores.
Following reports that credit card companies “pushed back” on the application, the pension fund officials want transparency on how the companies’ boards handled the issue and whether they are “appropriately considering the risks inherent in failing to take action to report suspicious purchasing activity at these retailers,” the letters said.
CalSTRS and the New York City pension funds’ combined shares are valued at $241 million in American Express, $951 million in Visa and $834 million in Mastercard, the letters said.
Mr. Lander announced Tuesday the filing of a shareholder proposal at Mastercard and American Express to have them publicly report their oversight of the gun sales merchant code application.
“Mass shootings are a significant societal problem. In 2022, there were 432 mass shootings through August 2022,” and a financial institution “must ensure its systems are not used for criminal purposes,” the proposal said. Having a merchant code for gun and ammunition stores would let credit card companies use existing reporting systems, without limiting or regulating gun sales, the proposal said, while failing to address the issue “will result in lost lives, as well as regulatory, reputational, and litigation risks that may threaten long-term shareholder value.”
Mastercard spokesman Seth Eisen said in an emailed statement that “we are reviewing how it could be implemented and managed by the banks that connect merchants to our network. This will help us continue to deliver a payments system that supports all legal purchases while protecting the privacy and decisions of individual cardholders.”
Calls to American Express and Visa were not immediately returned.