There’s trouble on the horizon for legal gun stores. Slowly and quietly, financial institutions are rethinking their relationships with firearms. As a result, more and more legal fireman businesses are receiving notices that their financial services have been terminated.
GE is one of the big financial firms to retreat from gun businesses. In the days following the tragic school shootings in 2013, which claimed the lives of 20 first-graders and six adults, private-equity firm Cerberus Capital Management LP announced that it would try to sell the gun company it owned. This company – Freedom Group Inc. – produces many brands, including: Bushmaster, Marlin, H&R and Remington.
These company’s decisions were in response to investors and employees concerns over the public horror over the devastating attacks. In the midst of these changes, more and more gun-control legislation was being pushed in Congress. Spokesman Russell Wilkerson explained that “industry changes, new legislation and tragic events” all contributed to GE Capital’s decision to reexamine its policies on financing firearms.
According to The Wall Street Journal, “GE’s withdrawal has symbolic significance, as well as real consequences for the companies that used the service. Gun sellers said financing leads customers to spend more on firearms and accessories.”
Losing financing and merchant accounts is a problem felt by firearms dealers across the country – and it’s getting worse. The FDIC has even acknowledged that Operation Choke Point – an initiative designed to reduce unlawful fraud by removing illegal players from financial institutions – is actually discriminatory towards legal businesses. In an effort to rectify these discriminatory practices, the FDIC is now encouraging institutions to take a risk-based approach; that is, these institutions should assess individual customer relationships, not simply resort to declining banking services to entire categories.
Are financial institutions following these guidelines? The general consensus seems to be a strong “no”. A North Carolina firearms dealer, Luke Lichterman, shared that banks are actually requiring “ridiculous and somewhat illegal” information after the more recent terrorist attacks affecting the nation (Orlando, Florida). His belief is that the timing is not a coincidence, but the result of gun control becoming a hot issue once again.
In an interview with The Daily Signal, Lichterman said, “It all comes back to the Obama administration and Operation Choke Point, the ‘undesirable businesses’ thing. Something like that from the government has ripples that keep radiating. It’s not something that you can turn on and turn off.”
So, is there any hope for firearms dealers in the future, especially for startups? High risk providers strongly answer, yes, there is. High risk providers – like eMerchantBroker.com – specialize in providing more than just financing for “high risk” businesses; they also offer chargeback prevention programs, merchant accounts, electronic check processing and more. For the firearms dealer, the online firearm merchant account is specifically tailored to meet the industry’s needs.
Saying that the industries current atmosphere is unstable is putting it lightly. Thankfully, alternative providers stepping up has provided a solution for these businesses. In the meantime, all will be waiting to see what changes are made to legislation.