Earlier this year, an innovative new credit-card processing service company quietly changed its terms of service to exclude legitimate firearms transactions, seemingly falling into compliance with federal law-enforcement agencies’ crackdown on certain “high-risk” — but legal — industries.
Square, the card reading mobile app which allows payment processing for merchants through their cell phones or tablets, modified their terms of service this summer. Square notified vendors that they were “not allowed” to accept payments involving a number of activities that the government deemed “risky” or objectionable.
One such service now considered verboten by federal regulators is the sale of “firearms, firearm parts or hardware” and “ammunition.”
Writing for the Daily Signal, an online news outlet produced by the Heritage Foundation, Jennifer Kerns reported that Square had originally only prohibited the online sale of firearms or ammunition.
However, the re-write of the terms does not make that distinction, therefore prohibiting the use of the Square device and service in local gun shops. The similarities between “Choke Point” and the new terms of service become even more obvious in the case of gun-shop owners seeking to sell legal firearms at gun shows, a use-case in which the Square device would be necessary to conduct transactions.
Such prohibitions, as Kerns suggests, “halt the processing of transactions of citizens who simply wish to buy or sell firearms or ammunition” legally.
While Square’s terms of service were being updated, the implications of a secretive United States Department of Justice (DOJ) program known as “Operation Choke Point” were being made public.
The firearms industry made the hit list, with “gun dealers and manufacturers as well as firearms retailers” labeled by regulators and law enforcenment agencies as”high-risk.” Other “high-risk” industries affected by “Choke Point” include fireworks venders, adult film producers, and charity organizations.
A report from the United House of Representatives’ Oversight Committee indicates that DOJ had portrayed the list of risky businesses as a simple guide to banks, but its implementation “effectively transformed this guidance into an implicit threat of a federal investigation.”
As early as May 2013, the government’s implicit threats had succeeded in drying up legitimate businesses’ accounts. Some retailers doing business with Bank of America saw their accounts frozen, with one business owner even reporting that they were told by a bank manager that they did not support the business’s right to “be selling guns and parts on the internet.”
Another business, Top Gun Firearms Training & Supply in Miami, Florida was similarly “dumped” by their bank, as it was claimed that legal firearms sales were “not commensurate with the industries” with which the bank worked.
While the only obvious link between Square’s change of business terms and Operation Choke Point is the coincidental timing, the pattern of detrimental actions taken by other banks and merchants in relation to the firearms industry is highly suspect.
In addition to concerns about the referent power which the DOJ may exert over banking companies, it is also unclear whether or not “Choke Point” has been discontinued or not.
Most notably, SunTrust Bank admitted in August that it had closed the accounts of legal businesses at the request of the federal government, citing unspecified “compliance requirements.”
In response to the bank’s mysterious actions, which have not yet been clarified or elaborated upon, Cato Institute Director of Financial Regulation Studies Mark Calabria told Daily Signal reporter Kelsey Harkness that the “admission from SunTrust demonstrates that Operation Choke Point has not ended, but actually expanded while becoming even less transparent.”
Rusty Weiss ([email protected]) writes from Troy, New York.