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If you’re looking to start an online firearms business, you’ve probably come across the term “FFL transfer.” The following information will give you more insight into how the transfer of a firearm works. Which will come in handy considering first-time gun owner sales are surging in the US. To combat this rise in gun sales and transfers, there are a few things you need to be aware of if you are in the industry, including FFL transfer fees, rules, and regulations. This is precisely why it can be difficult to acquire firearms merchant services in the first place.
Read on to find out how FFL transfers affect your business online and offline at the state and federal level.
What is an FFL Transfer?
Before we describe an FFL transfer and go over its rules, we need to define “FFL.” “FFL” stands for “Federal Firearms License.” In the US, an FFL allows a person or business to sell firearms or import and manufacture them. You can also use the term “FFL” to describe the holder of a federal license–a “Federal Firearms Licensee.”
In basic terms, an FFL transfer or federal firearms transfer requires a firearm licensee to turn over the possession of a firearm to another FFL before it goes to a customer, or non-licensee. Therefore, the term “FFL transfer,” specifically refers to a gun sale through a federally licensed firearms dealer.
So, how did this originate?
The 1968 Gun Control Act requires an FFL to transfer firearms sold, gifted, or loaned across state lines. However, an in-state transaction involving the gift, sale, or loan of a firearm does not require a licensed transfer in every state. To learn if your state requires FFL transfers within its boundaries, you will need to refer to your state’s legislation.
National Firearms Act (NFA) states that firearms, such as silencers or short-barreled rifles, must be transferred to an FFL that is also a SOT. “SOT” is an acronym that stands for “Special Occupational Taxpayers,” a group of FFLs who transfer, import, or manufacture NFA weapons. This NFA special occupation taxpayer class represents part of the 1986 IRS federal code.
What is an FFL Dealer?
To initiate a transfer, your customers will need to contact an FFL Dealer. FFL dealers may be classified as gun shop owners or gun dealers, as they hold a Federal Firearms Licenses, to sell shotguns, rifles, and handguns. Therefore, an FFL-to-FFL transfer entails shipping guns between two gun stores, each of which possesses a Federal Firearms License.
When do Firearms Transfers Take Place?
Basically, the transfer of a firearm takes place when an FFL dealer sells a gun to a customer, or when a dealer ships a gun to another licensed dealer for customer pick-up. If you want to sell a gun across state lines, you need to find an FFL dealer to handle the transaction, so the gun can be sent to another licensed dealer and the buyer can pick up the firearm there. If your customers buy a gun from you online, you must send the gun to an FFL dealer in their state so the customer can receive the firearm.
For a transfer to occur, you need to follow certain steps – steps that follow the Bureau of Alcohol, Tobacco, and Firearms (BATF) mandates. For example, you cannot continue with an FFL transfer for a private sale unless you fill out paperwork, or complete an ATF Form 4830. In this case, the buyer fills out the top portion of the form and as the gun shop or licensed dealer, you would complete Section B of form 4830.
Once the form has been completed, the FFL must conduct an FBI background check through the National Instant Criminal Background Check System (NICS). If the licensed dealer gets a response to proceed with the transaction, he or she can follow the FFL transfer rules for transacting business, so the gun can be sent to the buyer.
FFL Transfer Rules
Because firearms is such a regulated industry, it’s important to be familiar with the FFL transfer rules when conducting a firearm trade.
Upon receiving a “Proceed” response from performing a background check of the prospective buyer, an FFL transfer agent will record the firearm into an acquisition and disposition (A&D) log, noting the gun, in this case, represents a firearm from a private seller. The serial number for the weapon will also be recorded in the BATF bound log. After completing Section D of ATF Form 4473, the licensee transfers the firearm to the private buyer. The FFL records the transfer disposition in the A&D log within seven days after the transaction.
What happens if the NICS background check returns a “Denied” or “Canceled” response?
If the FFL receives a response of “Denied” or “Canceled,” after performing a NICS background check, the transfer is void. If the private seller has not given the FFL exclusive possession of the firearm, he or she can leave the business premises with the weapon. The gun will not be recorded as an acquisition in the A&D log book. However, if the background check comes back as “Denied” or “Canceled,” and the seller has given exclusive possession of the firearm to the agent or gun dealer, the FFL must record the gun as an acquisition from a private party seller in the A&D record.
The FFL may make a licensed transfer from the private party seller if it gets a “Proceed” response, or a “Delayed” response from the NICS after three business days. This can also take place if a state’s allocated wait period is over three business days. If a transfer takes place, the seller does not need to return to the gun shop to complete the transaction. The FFL will complete the transfer to the buyer and record the disposition to the buyer in the A&D log within seven days. If the NICS does not respond within three business days, the FFL can either go ahead with the transfer or decide against proceeding with the transaction.
How an FFL Transfer Takes Place Online
No matter what industry you belong to, providing safe online shopping experiences for your customers is premier. In the case of firearms, this is doubly true. Unfortunately, selling firearms online and in-person is high risk in many ways of thinking and you must be on top of industry standards.
If a buyer purchases a gun online, he/she needs to contact a local FFL dealer to handle the transaction and to pick up the gun. In this case, the eCommerce retailer (presumably you) ships the gun to the FFL, and not to the buyer’s residence. When your online buyer picks up the gun, the following steps will take place:
- The FFL dealer records the weapon’s serial number in the BATF bound book.
- The buyer provides their picture I.D. and fills out ATF form 4830. This way, demographic data can be collected and to ensure that the buyer is not prohibited from buying a firearm.
- The FFL will check the buyer’s background through the NICS database.
- After the buyer passes the check, an FFL transfer will be made from the licensee to the buyer.
- The buyer pays the associated fee for the firearm transfer.
The Cost: What is the FFL Transfer Fee?
A major part of a firearm transfer includes paying or receiving the FFL transfer fee. Just from transfers alone, many gun dealers can make a nice side income to add to their gun sales. The licensee charges an FFL transfer fee of $20 to $50 on average for processing the FFL documentation. This includes the price for conducting the NICS background check.
Keep in mind these fees can vary for credit card processing of firearms state by state. You’ll want to utilize a reputable licensee and that can mean a higher FFL transfer fee.
Should Your Business Offer FFL Transfers?
Now is the time to join the firearm industry. Deciding to deal guns or sell ammunition online can be a worthwhile endeavor while the market is booming.
If you own a gun store or advertise as a gun dealer, a federal license must be obtained to transact licensed transfers. While you do not need an FFL for selling ammunition, you do need to obtain one if you legally intend to sell firearms. Therefore, an FFL must be obtained for licensed transfers if you:
- Commercially sell guns or engage in the buying and selling of guns to make money
- Manufacture ammunition (as noted, you don’t need an FFL if you only sell ammunition)
- Import or export firearms or ammunition
- Manufacture firearms or produce firearm receivers or frames
Generally, gun shops or gun dealers use their licenses for FFL transfers. If you intend to sell firearms for a profit, you will need to obtain a federal firearms license to make legal transfers. Therefore, you must be able to make transfers if you choose to sell firearms privately or publicly.