House Bill 38 would create a new Article 52 in Chapter 66 of the North Carolina General Statutes, titled the Second Amendment Financial Privacy Act. The bill is based on legislative findings that the right to keep and bear arms is protected by the U.S. and North Carolina constitutions and that firearms-related merchant category codes could allow payment card networks to identify and track lawful firearms purchases. To address that concern, the bill prohibits payment card networks from using a firearms code for transactions involving firearms merchants in North Carolina, from knowingly maintaining records of firearm ownership for state residents, and from discriminating against firearms merchants because such a code is or is not assigned.
The bill defines key terms such as “firearms code,” “firearms merchant,” and “payment card network,” and it excludes banks and credit unions holding federally insured deposits from the definition of payment card network. It also gives the Attorney General authority to investigate alleged violations and assess civil penalties of up to $5,000 per violation, with proceeds going to the Civil Penalty and Forfeiture Fund. In addition, the bill creates a private right of action for affected firearms merchants, card users, and individuals whose firearm ownership records are maintained, allowing injunctive relief, $10,000 in statutory damages per violation, and attorney’s fees, subject to a three-year limitations period.
The bill would affect payment card networks operating in North Carolina and could change how card transactions involving firearms merchants are processed and coded. It would also create new enforcement and litigation exposure for networks that use merchant category codes or maintain records tied to firearm ownership. The act is set to become effective October 1, 2025.
The available context shows no recorded committee debate or votes, so there is no direct evidence of legislative discussion in the materials provided. Based on the bill text, the measure appears to be framed as a privacy and constitutional-rights protection bill, with an emphasis on preventing perceived surveillance or chilling effects on lawful gun purchases. The main point of contention implied by the bill is whether payment card networks should be barred from using firearms-related coding and recordkeeping, balancing consumer privacy and Second Amendment concerns against financial-network compliance and transaction-monitoring practices.
HB38 would add a new statutory article to Chapter 66 regulating payment card networks in connection with firearms merchants and firearm-related transactions. It would prohibit the use of firearms merchant category codes, bar maintenance of firearm ownership records for North Carolina residents, and forbid discrimination against firearms merchants based on firearms-code assignment. The bill also authorizes Attorney General enforcement, civil penalties, and private lawsuits, thereby creating new compliance obligations and potential liability for payment card networks, while leaving banks and credit unions outside the statutory definition of covered networks.
The bill’s stated purpose and findings reflect strong support for gun-owner privacy and Second Amendment protections, suggesting a favorable sentiment among its sponsors and supporters. However, the absence of committee transcripts or vote data means there is no documented floor or committee opposition in the provided materials. The overall framing indicates the bill is intended as a protective measure for lawful firearms commerce rather than a broader financial regulation bill.
The central controversy is whether merchant category codes and related payment data constitute improper surveillance of lawful firearms purchases. Supporters of the bill would likely argue that such coding chills constitutional rights and creates a de facto firearms registry, while critics would likely view the restrictions as limiting legitimate fraud prevention, transaction monitoring, and private-sector data practices. The bill also raises potential disputes over the scope of “payment card network,” the feasibility of compliance, and the size and availability of statutory damages and attorney-fee awards in private enforcement actions.