Federal law imposes various duties on federally licensed firearms dealers. Firearms dealers must, among other things: 1) perform background checks on prospective firearm purchasers; 2) maintain records of all gun sales; 3) make those records available to law enforcement for inspection; 4) report multiple sales; and 5) report the theft or loss of a firearm from the licensee’s inventory.1 Federal law imposes none of these requirements on unlicensed sellers, however.

The Gun Control Act of 1968 provides that persons “engaged in the business” of dealing in firearms must be licensed.2 Although Congress did not originally define the term “engaged in the business,” it did so in 1986 as part of the McClure-Volkmer Act (also known as the “Firearms Owners’ Protection Act”). That Act defined the term “engaged in the business,” as applied to a firearms dealer, as “a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms.”3

Significantly, however, the term was defined to exclude a person who “makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms.”4

Consequently, unlicensed sellers may sell firearms without conducting background checks or documenting the transaction in any way. In addition, because federal law does not require private sellers to inspect a buyer’s driver’s license or any other identification, there is no obligation for such sellers to confirm that a buyer is of legal age to purchase a firearm. As a result, convicted felons, minors and other prohibited purchasers can easily buy guns from unlicensed sellers.

According to a 1999 report issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the current definition of “engaged in the business” often frustrates the prosecution of “unlicensed dealers masquerading as collectors or hobbyists but who are really trafficking firearms to felons or other prohibited persons.”5 A June 2000 ATF report found that unlicensed sellers were involved in about one-fifth of the trafficking investigations and associated with nearly 23,000 diverted guns.6 A national survey of firearm ownership conducted in 1994 determined that 60% of all firearm sales in the U.S. involved federally licensed dealers, while the remaining 40% of firearms were acquired from unlicensed sellers.7

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  1. 18 U.S.C. §§ 922(t), 923(g). ⤴︎
  2. 18 U.S.C. § 921(a)(21)(C). ⤴︎
  3. Id. ⤴︎
  4. Id. ⤴︎
  5. U.S. Department of Justice & Bureau of Alcohol, Tobacco and Firearms, U.S. Department of the Treasury, Gun Shows: Brady Checks and Crime Gun Traces 13-14 (Jan. 1999). ⤴︎
  6. Bureau of Alcohol, Tobacco and Firearms, U.S. Department of the Treasury, Following the Gun: Enforcing Federal Laws Against Firearms Traffickers xi (June 2000). ⤴︎
  7. Philip J. Cook & Jens Ludwig, Guns in America: National Survey on Private Ownership and Use of Firearms, U.S. Department of Justice, National Institute of Justice Research in Brief 6-7 (May 1997). ⤴︎