No Deal

The Drop in Federally Licensed Firearms Dealers in America

In 1992 the Violence Policy Center released More Gun Dealers Than Gas Stations, a study which focused national attention on abuses of the law by FFL holders. The study revealed that, at the time of its release, the number of Americans who possessed a Type 1 FFL�the basic federal license required to sell guns in America�outnumbered gas stations 245,000 to 210,000.¹

The Gun Control Act of 1968 (GCA) established the current federal licensing system for manufacturers, importers, wholesalers, and dealers of firearms. Under the GCA, any person "engaged in the business" of making or selling firearms must be licensed by the federal Bureau of Alcohol, Tobacco and Firearms (ATF).^a

From 1968 to 1993 almost anyone who was not prohibited from owning firearms and had a location from which they intended to conduct business�including their own home�could obtain an FFL. For $30 an applicant could receive the three-year license, allowing him to ship, transport, and receive firearms in interstate commerce and engage in retail sales. License holders are exempt from many of the restrictions on the sale and transfer of firearms that private citizens are subjected to under the GCA. Unlike ordinary citizens, licensees are:

• able to buy and sell firearms in interstate commerce and receive firearms via common carrier;
  
  
• able to purchase firearms from wholesalers at discount and in unlimited quantities; and,
  
  
• exempted from state and federal waiting periods, background checks, licensing, or registration requirements.

In 1986, Congress passed the National Rifle Association-backed Firearms Owners' Protection Act, which further eased regulation of licensees and placed restrictions on ATF's ability to weed out illegitimate gun dealers.^b

FFLs are a key source of guns for illegal gun traffickers and a reduction in ATF's ability to monitor FFLs would certainly result in an increase in illicit firearm availability. In the June 2000 report Following the Gun, ATF noted:

Although FFL traffickers were involved in the smallest proportion of ATF trafficking investigations, under 10 percent, cases involving FFL traffickers were associated with the largest total number of illegally diverted firearms, over 40,000, as compared to the other trafficking channels.²

a)"Engaged in the business" is generally defined as devoting "time, attention, and labor to engaging in such activity as a regular course of trade or business with the principal objective of livelihood and profit...." 18 USC �921(a)(21).

b) The Firearms Owners' Protection Act helped curtail ATF enforcement activity by: limiting ATF to one unannounced dealer inspection per year; reducing record-keeping requirements for dealers selling guns from their "personal" collections; and, imposing a high standard of proof while lessening criminal penalties for dealer violations.

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 All contents � 2002 Violence Policy Center