S.F. 2221 Section 1. NEW SECTION . 554H.1 Definitions. 1 1. “Ammunition” means the same as defined in section 683.1. 2 2. “Assign” or “assignment” means a financial institution’s 3 policy, process, or practice that labels, links, or otherwise 4 associates a firearms code with a merchant or a payment card 5 transaction in a manner that allows the financial institution, 6 or other entity facilitating or processing the payment card 7 transaction, to identify whether a merchant is a firearms 8 retailer or whether a transaction involves the sale of firearms 9 or ammunition. 10 3. “Customer” means a person engaged in a payment 11 card transaction facilitated or processed by a financial 12 institution. 13 4. “Disclosure” or “disclose” means the transfer, 14 publication, or distribution of protected financial information 15 to another person or entity for any purpose other than any of 16 the following: 17 a. Processing or facilitating a payment card transaction. 18 b. Taking any action related to dispute processing, fraud 19 management, or protecting transaction integrity from concerns 20 related to illegal activities, breach, or cyber risks. 21 5. “Financial institution” means a person other than a 22 merchant involved in facilitating or processing a payment card 23 transaction, including but not limited to any bank incorporated 24 under the provisions of any state or federal law, an acquirer, 25 a payment card issuer, a payment card network, a payment 26 gateway, or a payment card processor. 27 6. “Financial record” means a record held by a financial 28 institution related to a payment card transaction that the 29 financial institution has processed or facilitated. 30 7. “Firearm” means any weapon that is capable of expelling, 31 designed to expel, or that may readily be converted to expel 32 ammunition, and includes a firearm component or accessory. 33 8. “Firearms code” means a merchant category code approved 34 by the international organization for standardization that is 35 -1- LSB 5726XS (2) 90 nls/ko 1/ 5

S.F. 2221 specifically for firearms retailers and that is assigned to a 1 retailer by the retailer’s acquirer. 2 9. “Firearms retailer” means a person physically located 3 within the state who engages in the lawful selling or trading 4 of firearms or ammunition. 5 10. a. “Payment card” means any card that is issued 6 pursuant to an agreement or arrangement that provides for all 7 of the following: 8 (1) One or more issuers of the payment card. 9 (2) A network of persons unrelated to each other and to the 10 issuer who agree to accept a payment card as payment. 11 (3) Standards and mechanisms for settling the transactions 12 between the merchandise-acquiring person and the merchant that 13 agrees to accept the payment card as payment. 14 b. “Payment card” includes credit cards, debit cards, 15 stored-value cards including gift cards, and payment through 16 any distinctive marks of a payment card including a credit card 17 number. The acceptance as payment of any account number or 18 other indicia associated with a payment card shall be treated 19 in the same manner as accepting the payment card as payment. 20 11. “Payment card transaction” means any transaction in 21 which a payment card is accepted as payment. 22 12. “Protected financial information” means any record of 23 a sale, purchase, return, or refund involving a payment card 24 that is retrieved, characterized, generated, labeled, sorted, 25 or grouped based on the assignment of a firearms code. 26 Sec. 2. NEW SECTION . 554H.2 Financial institutions. 27 1. A financial institution or agent of a financial 28 institution shall not do any of the following: 29 a. Require the use of a firearms code in a manner that 30 distinguishes a firearms retailer from other retailers. 31 b. Subject to subsection 2, decline a payment card 32 transaction involving a firearms retailer based solely on the 33 acquirer’s assignment or nonassignment of a firearms code to 34 the firearms retailer. 35 -2- LSB 5726XS (2) 90 nls/ko 2/ 5

S.F. 2221 2. Subsection 1 shall not be construed to prohibit a 1 financial institution from declining or otherwise refusing to 2 process a payment card transaction for any of the following 3 reasons: 4 a. If necessary to comply with applicable state or federal 5 laws. 6 b. If requested by a customer. 7 c. If necessary due to fraud controls. 8 d. For purposes of merchant category exclusions offered by 9 a financial institution for expenditure control or corporate 10 card control. 11 3. Except as otherwise required by law, a financial 12 institution may not disclose a financial record, including a 13 firearms code that was collected in violation of this section, 14 unless the disclosure of such financial record or firearms 15 code was based on a good-faith conclusion that the financial 16 institution’s action was required by law. 17 4. This section shall not be construed to limit the 18 authority of a financial institution to negotiate with 19 responsible parties, or to otherwise impair a financial 20 institution’s actions related to dispute processing, fraud 21 management, protection from illegal activities, breach, or 22 cyber risks. 23 Sec. 3. NEW SECTION . 554H.3 Enforcement —— penalties. 24 1. The attorney general shall investigate reasonable 25 alleged violations of this chapter. If the attorney general 26 has reasonable belief that a person is in violation of this 27 chapter, the attorney general shall provide written notice to 28 the person determined to have committed the violation. 29 2. Upon receipt of notice of a violation under subsection 30 1, the person shall have thirty calendar days to cease the 31 violation. 32 3. If the violation persists after the expiration of the 33 thirty-day period under subsection 2, the attorney general has 34 the sole authority to bring civil action in district court to 35 -3- LSB 5726XS (2) 90 nls/ko 3/ 5

S.F. 2221 enjoin further violations by a person found to be in violation 1 of this chapter, in addition to other remedies permitted by 2 law. 3 4. If a person knowingly or willfully fails to comply 4 with an injunction issued under subsection 3, after thirty 5 calendar days of the date the person is served with the 6 injunction, the attorney general may petition the district 7 court to impose civil penalties in an amount not to exceed ten 8 thousand dollars per violation, taking into consideration the 9 financial resources of the violator and the harm or risk of 10 harm to the violator’s rights under the second amendment to the 11 Constitution of the United States and Article I, section 1A, 12 of the Constitution of the State of Iowa resulting from the 13 violation. 14 5. It shall be a defense to a proceeding initiated pursuant 15 to this section that a firearms code was required to be 16 disclosed or assigned by law. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill relates to payment card transactions of firearms 21 and ammunition. 22 The bill prohibits a financial institution, or an agent 23 of a financial institution, from requiring the use of a 24 firearms code in a way that distinguishes a firearms retailer 25 from other retailers. “Financial institution”, “firearms 26 code”, and “firearms retailer” are defined in the bill. The 27 bill also prohibits a financial institution from declining 28 a payment card transaction involving a firearms retailer 29 based on the assignment of a firearms code. “Payment card 30 transaction” and “assignment” are defined in the bill. The 31 bill does not prohibit a financial institution from declining 32 or refusing to process a payment card transaction if necessary 33 to comply with applicable state or federal laws, if requested 34 by a customer, if necessary due to fraud controls, or for 35 -4- LSB 5726XS (2) 90 nls/ko 4/ 5

S.F. 2221 purposes of merchant category exclusions offered by a financial 1 institution for purposes of expenditure control or corporate 2 card control. The bill prohibits a financial institution from 3 disclosing a financial record, including a firearms code, 4 unless the disclosure was based on a good-faith conclusion that 5 the financial institution’s disclosure was required by law. 6 “Disclosure” and “financial record” are defined in the bill. 7 The bill does not limit or impair the authority of a financial 8 institution to negotiate with responsible parties or a 9 financial institution’s actions related to dispute processing, 10 fraud management, or protecting against illegal activities, 11 breach, or cyber risks. 12 Under the bill, the attorney general shall investigate 13 reasonable alleged violations of the bill and, if the attorney 14 general has reasonable belief that a person is in violation of 15 the bill, the attorney general shall provide written notice 16 to the person determined to have committed the violation. 17 Upon receipt of notice of a violation, a person shall have 18 30 calendar days to cease the violation or, if the violation 19 persists, the attorney general may bring civil action in 20 district court to enjoin further violations, in addition to 21 other remedies permitted by law. If a person knowingly or 22 willfully fails to comply with an injunction after 30 calendar 23 days from the date of being served with the injunction, 24 the attorney general may petition the district court to 25 impose civil penalties in an amount not more than $10,000 26 per violation. The bill creates a defense to a proceeding 27 initiated under the bill that a firearms code was required to 28 be disclosed or assigned by law. 29 -5- LSB 5726XS (2) 90 nls/ko 5/ 5