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Operation Choke Point Pushes Gun Retailers into Banks’ Crosshairs

A large – and growing – number of businesses are feeling the effects of “Operation Choke Point”. Gun retailers and manufacturers are among the unfortunate businesses targeted by the administration’s efforts. According to these businesses, the Obama administration is forcing them out of business. The regulations and investigations are cutting off their funding, freezing their assets and shutting down their online sales.

In 2011, the Federal Deposit Insurance Corp. urged banks to be more cautious with their merchant customers; that is, the customers who employ payment processors. The investigation of banks and payment processor was then launched in 2013 – Operation Choke Point. The administration informed the banking industry that all ties should be cut with customers that were potentially “risky” to do business with.

In a Wall Street Journal opinion piece, Frank Keating, CEO of the American Bankers Association, shared his feelings on the issue: “When you become a banker, no one issues you a badge, nor are you fitted for a judicial robe. So why is the Justice Department telling bankers to behave like policemen and judges?”

In a blog posted on May 7, 2014, the Justice Department expressed their commitment to ensuring their efforts to combat fraud and unlawful conduct would not affect legal, honest merchants. A representative of the department also shared that the aim of the investigations was to protect customers from fraudulent merchants. Gun retailers, however, have a very different story to tell when it comes to the executive branch’s efforts.

According to owner of American Spirit Arms, Joe Sirochman, “All this is, is an assault on our Second Amendment rights.”

At first, it was the bigger businesses – gun parts manufacturers and high-profile retailers – that were the target of Operation Choke Point. But then the attention turned to the smaller mom-and-pop shops. Without the cash to buy inventory and dropped accounts, these companies are left with no choice but to go out of business.

Ilya Shapiro, a senior fellow in constitutional studies at the Cato Institute and editor-in-chief of the Cato Supreme Court Review says, “Selective enforcement of the law is always a problem. There’s always prosecutorial discretion to go after [for example] violent crime more than nonviolent crime, but you can’t say you’re only going to enforce law against certain businesses.”

The result? According to Shapiro, doing so “betrays the rule of law. And it potentially hurts economic growth because businesses don’t know how the rules will apply to them, and they won’t be able to plan.”

Banks continue to either drop businesses, freeze their accounts or refuse to process their online sales. In addition, regulations on the financial industry have only increased over the past few years. The “choking” of “undesirable” businesses and industries continues. If anything, the effort to cut off credit and the use of other tactics to force these businesses to close has intensified.

As an industry categorized as “risky” by the government (and therefore the banks), legitimate gun companies across the country have suffered the chilling effects. According to The Washington Times, banks continue to shy away for fear of being involved in “high risk activities that could create litigation risk and reputation risk for financial institutions”. The only solution that has proved to be safe is working with a high-risk provider, like

A high risk provider specializes in working with companies and industries otherwise categorized as “high risk”. They offer companies safe payment processing solutions, business funding and chargeback prevention and protection programs. A gun retailer, for example, can quickly secure an online firearm merchant account through a fast, safe and hassle-free application process.

Even though firearms are one of the most heavily regulated industries in the U.S., merchants can rest easy knowing there are still solutions available. Alternative providers can still offer solutions, even if banks refuse. So far, gun retailers are continuing to fight back, determined to hold their own.