In an effort to appease opponents of Second Amendment rights, Visa began to implement a policy to track firearms purchases through the use of Merchant Category Codes (MCC) that would have separately categorized sales at firearms stores that are currently labelled "general merchandise” sales. (1)
In the year since the Company adopted and then (in early 2023) abandoned this plan, (2) 19 states approved legislation regulating MCCs specifically targeting firearms stores for disparate treatment. Sixteen states have enacted laws prohibiting the use of MCCs that separate gun retailers for unequal treatment, and conversely, three
states have passed bills to mandate such treatment.
(3)
In hindsight, it’s now pretty certain that Visa made the right decision to abandon its short-lived MCC plans and excuse itself from this divisive political battle playing out on the state level. Obvious, current and directly relevant litigational, financial and reputational risk considerations suggest that Visa’s shareholder value-protection, open
communication and objective management obligations require it to disclose its intended policy for the remaining
31 states where Visa’s MCC policy must be dictated by fiduciary duty rather than state decree.
The report we seek should provide that disclosure (which is likely already required due to fiduciary duties of care,
loyalty, prompt and honest disclosure, and so forth). Optimally, it should include a cost/benefit analysis of what
MCC-adoption in those 31 states would assertedly accomplish, and whether those claimed benefits are based on
objective, sound analysis that has taken into account all material considerations – including, for instance, a
University of Pittsburgh study which found that lawful gun owners commit less than a fifth of all gun crimes.
(4)
The
review should also evaluate the potential costs of MCC-adoption, including the various risks posed to the
Company and its shareholders were Visa to publicly place itself squarely in the crossfire of a divisive political
battle on a hot-button issue.
Given that the original initiative to track firearm purchases was paused, and that MCC legislation has already been
passed in many states and is likely to be passed in others, shareholders would benefit from transparency
regarding the Board’s oversight of the Company’s position on MCCs, and whether the Company is appropriately
considering all the risks inherent in its decisions on this matter. Failure to do so may expose the Company to
regulatory, reputational and litigation risks that may threaten long-term shareholder value.