Within the span of a year, Honor Defense has been discriminated against by two separate credit card processors. You may ask, “Why the hate?” Honor defense is a reputable business after all. It plays by the rules. The answer to that question is because Honor Defense makes and sells pistols to federally licensed distributors and dealers, and law-abiding citizens. What’s wrong with that? Nothing! Nothing at all.
The Stripe Saga
Unless you’re a big bank then it’s a big problem because you probably view arming responsible citizens as a contemptible act. Then instead of helping a small business owner, you want to freeze them out, see them wither on the vine. Honor Defense first learned this lesson back in August of last year. One day it received a notice from Stripe, it’s online payment processor at that time.
“While we hate to give you anything less than a great experience, it does seem that your business is in violation of our Terms of Service, section A.7.B (“Prohibited Business and Activities”),” read the email notice obtained by GunsAmerica. “Specifically, we are unable to accept payments for weapons and ammunitions as mentioned here: https://stripe.com/prohibited-businesses.”
The president of Honor Defense Gary Ramey was confused. Honor Defense had been working with Stripe for approximately a year and a half and suddenly they wanted to part ways. After reviewing the policy, Gary came up with a compromise. He would no longer offer the Honor Guard pistol for sale on the Honor Defense website. Instead, he would just offer parts, accessories and apparel. As a small business owner trying to make ends meet this would save him the trouble and time of having to find a new provider. Certainly, his compromise would be agreeable.
Nope. It was not. Stripe was dead set on terminating the relationship.
“I appreciate your willingness to work with us and stop accepting online payments for specific products on your website,” wrote one representative in an email. The representative went on to say that even “parts of a weapon” are products they “can’t support.”
The Stripe’s representative was clear on the reason why the company could no longer support Honor Defense.
“I’d like to make sure you are aware this decision is not a reflection of your business directly. This is due to the vast net our financial partners cast over the entire weapon and munition industry,” she wrote. “Their unwillingness to venture into supporting this industry leaves us in the position of having to turn away businesses, such as yours, that we’d otherwise love to support.”
You hear that? Big banks don’t like guns! And they don’t like gun companies. Honor Defense would have to find a new credit card processor. Thankfully, Gary found the eProcessing Network and started working with them for the online store. All good, right? Wrong.
Enter Intuit/QuickBooks. Honor Defense was using this software company for processing phone call orders where keystroking credit card info is required. As with Stripe, Intuit one day decided to terminate the relationship. Intuit’s particular beef with Honor Defense was that by accepting phone orders they could not see who they were selling firearms to. The transaction wasn’t face-to-face. Nope, that’s not a joke.
Gary, very patiently, explained to Intuit how it works. Honor Defense, a federally licensed manufacturer, can only ship guns to other federally licensed entities, i.e. gun dealers aka FFLs. In the case of a sale to a private individual, Honor Defense sends the gun to an FFL in the purchaser’s area. Before being allowed to take possession of the pistol, the prospective purchaser must pass a background check.
Still, Intuit was not persuaded. In fact, not only would it stop processing pistol sales over the phone for Honor Defense but it would also halt processing the sale of t-shirts and other merchandise.
“A recent review of your account reveals that you are engaged in a business that no longer conforms to the acceptance criteria of Intuit Payment Solutions, LLC,” said the company in a notice dated March 20, 2018, obtained by GunsAmerica.
“Intuit follows a published acceptable use policy that outlines the nature of customers it is able to service and transactions it can process,” it continued. “This list is not a value judgment regarding the underlying legitimate businesses themselves, but it drives from the relationships Intuit has with the card brands and banks.”
Gary was nonplussed. “The bias against our industry is based in ignorance of the law,” he told GunsAmerica. “Honor Defense partners only with USA suppliers, parts and materials. Every firearm is assembled and test-fired by Veterans. It’s hard to imagine that companies have a bias against us or our industry.”
The Georgia Firearms Nondiscrimination Act
Notice any similarities in the reasoning? That’s right, the financial powers that be don’t want their affiliates working with gun-related businesses. By this time, Gary was ticked off. Who could blame him? Another processor dumped Honor Defense not because the business wasn’t lawful or that working with Honor Defense wasn’t profitable, but because it was a 2A company. Gary looked for recourse. Luckily, he had previously been part of an NSSF-sponsored industry group that met with Georgia legislators while they were drafting the “Georgia Firearms Industry Nondiscrimination Act.”
Lo and behold the GFINA is exactly what it sounds like. It states that “it shall be an unlawful practice for any person to refuse to provide financial services of any kind to, to refrain from continuing to provide existing financial services to, to terminate existing financial services with, or to otherwise discriminate in the provision of financial services against a person or trade association solely because such person or trade association is engaged in the lawful commerce of firearms or ammunition products and is licensed pursuant to Chapter 44 of Title 18 of the United States Code or is a trade association.”
Seems like a no-brainer. In both cases, Intuit and Stripe dumped Honor Defense because it’s a gun company. They said as much in their emails. Gary reached out to the state attorney general’s office to file a complaint against both companies. Should be an open and shut case? Right? Wrong.
Apparently, processing payments online is not a “financial service,” according to a letter, obtained by GunsAmerica, from Assistant Attorney General David V. Carson dated May 23, 2018. Confused? Me too. Here is an excerpt from the Carson letter:
From our research, Intuit and Stripes appear to both be incorporated and licensed under Delaware law as “Check Sellers / Money Transmitters” and are considered “Non-Depository Institutions.” Money transmitters are engaged in the business of receiving money for transmission or transmitting money within the United State or to locations abroad, for which they charge fees. Businesses engaged in money transmission services are required to obtain licenses to provide such services are subject to an entirely different regulatory scheme than state or federally chartered banks. As a result, neither entity would appear to properly considered a bank, trust company, building and loan association or credit union as defined in O.C.G.A. 7-1-14, or a federally charted banking institution that accepts state deposits. Further, neither entity would be properly considered as a merchant or acquirer limited purpose bank under O.C.G.A. 7-9-2, as Intuit and Stripe are not organized in Georgia under that specific chapter. Therefore, the services which Intuit and Stripes have refused to provide or continue to provide to Honor Defense are not considered “financial services” which would come under the purview of the Act.
The long and the short of it is that, evidently, Intuit and Stripe are not covered by the Georgia Firearms Industry Nondiscrimination Act.
Is the fight over? Maybe not. Honor Defense is now reaching out to Lt. Governor Casey Cagle’s office to see if something else can be done. We reached out to Cagle’s office, Phone: (404) 656-5030, as well to see if he plans on taking up the matter. We’re awaiting his reply.
It should be noted that Honor Defense wasn’t the only firearms-friendly business affected by Intuit. Gunsite Academy, based in Arizona, also got the boot recently.
Ken Campbell, the Chief Operating Officer of Gunsite, seemed to shrug off Intuit’s decision. “It’s fine, it’s capitalism, and if you don’t want to do business with us, we don’t want to do business with you,” he told the New York Post.
While I’d certainly echo the spirit of Campbell’s remarks, there’s that lingering question of legality. Should it be legal for powerful banks, financial institutions and, yes, even payment processors to take a discriminatory approach to the gun industry? Not to delve too deeply into identity politics but what if the shoe was on the other foot? What would happen if those same money managers were to stop processing payments for gay bars or animal rights groups or abortion clinics?