While everyday consumer products, such as beauty supplies and technology devices, are commonplace for online fraud, more regulated items are also entering this realm of illicit activity. Felons, minors, and others legally banned from purchasing firearms or wishing to own a gun without the required background checks or registration are increasingly turning to “ghost guns” – unregistered firearms, without serial numbers, bought online for home assembly.
What is a Ghost Gun?
Ghost guns are firearms which are sold as incomplete kits and require some assembly by the purchaser. Think Ikea… but for guns.
Ghost gun kits are sold online, and detailed instructions for how to complete the firearm assembly can be found easily, if not already included in the kit. Even amateurs can manage to turn an incomplete kit into a fully functioning – and deadly – firearm in about one hour. Popular firearms, such as Glock pistols and AR-15s are often available as ghost guns.
With some of the more political connotations around guns, President Biden announced last month a set of initial steps to crackdown on ghost guns. As the New York Times reports, “ghost guns aren’t new, but they are a growing problem. Even though kits to assemble guns have been sold since the 1990s, the market did not really take off until around 2009.”
Now, the deadly effect is being felt on the streets, and law enforcement is taking notice.
Police departments in the United States have noted a marked increase in the number of recovered firearms without serial numbers and crimes executed with ghost guns. For example, the Philadelphia police department reported it had recovered more than 300 ghost guns as of September 2021, a marked increase from the 95 and 250 in 2019 and 2020, respectively.
Closing the Legal Loophole
Due to loopholes in federal firearms laws, which stipulate that a firearm frame less than 80% completed is not subject to federal safeguards, ghost guns have become a way around gun laws for those barred from purchasing firearms or wishing to own firearms under the radar. Currently only seven states (New Jersey, Connecticut, California, Washington, Hawaii, Nevada, and Rhode Island) have laws which target ghost guns and privately made firearms.
In May 2021 the U.S. Department of Justice (DOJ) — acting on new federally issued guidelines for the Bureau of Alcohol, Tobacco and Firearms (BATFE) – began working to close this loophole by expanding the definition of what constitutes a firearm and its related parts. The regulations are expected to take effect in early 2022 after a prolonged public comment process.
At the same time, lawmakers in the House of Representatives are pushing for laws in line with the new federal regulations and that lay out penalties and sentences for illegal ghost guns. The closing of the legal loophole relating to ghost guns, combined with expanded crackdowns from law enforcement, will theoretically stem the ease with which ghost gun kits are sold legally.
However, law enforcement experts are not hopeful that it will end the phenomenon and expect a proliferation of extralegal sales – particularly online. Supplies already currently available for ghost gun kits are estimated to be plentiful. Furthermore, the ban on ghost guns is expected to generate a lucrative black market with organized criminal gangs seeing the trafficking of ghost guns as a business opportunity. Here at EverC, we recorded an 8% increase in the number of counterfeit and illegal firearms from 2019 to 2020 alone.
Online Phenomenon
Ghost guns, as with other illegal or grey-area products, are thriving in the ecommerce age and posing challenges for financial institution compliance obligations. Ghost gun retailers exploit lax due diligence or product level tracking in the ecommerce realm to freely offer their products and even accept mainstream payment methods for these purchases. Marketplaces are particularly ripe for abuse where innocuous products serve as a placeholder for ghost gun kits offered on other websites. The greatest concern is that these illegal products will be used in a way that ultimately hurts or kills someone, such as what happened in 2013, when a ghost gun was linked to a shooting at Santa Monica College in California, which killed six people.
The proposed rules will mean that financial institutions such as acquiring banks and payment processors, as well as marketplaces must ensure that any firearms merchants are not offering ghost guns and are compliant with all applicable laws. Additionally, an increased focus on identifying transaction laundering related to ghost gun sales should be undertaken.
To ensure their payment infrastructure is not being abused for the illicit sale of ghost guns, financial institutions should:
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Audit their portfolio for known firearms merchants and ensure all products are in line with new regulations
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Employ a Merchant Monitoring Service Provider to track new listings and merchant product changes
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Use tools and procedures to identify suspicious merchants who may be engaged in transaction laundering.
For more information on how EverC is working to proactively scan ecommerce sites for ghost guns and other illegal products, learn more here.
