109th CONGRESS
2d Session
H. R. 6299
To prevent children from purchasing Internet-distributed age-restricted
products and services by regulating the funding thereof and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
September 29, 2006
Mr. PICKERING (for himself and Mr. BACHUS) introduced the following bill;
which was referred to the Committee on Financial Services
A BILL
To prevent children from purchasing Internet-distributed age-restricted
products and services by regulating the funding thereof and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Protecting Our Children from Age-Restricted
Internet Products and Services Act of 2006'.
SEC. 2. FINDINGS.
The Congress finds that--
(1) the Internet enables anyone, regardless of age, to visit merchant
websites selling a vast array of products and services, including products
and services that, by Federal or State law, cannot be sold to minors;
(2) Internet-distributed age-restricted products and services are primarily
purchased using personal payment system instruments and credit cards;
(3) age-verification systems based on purely electronic means of identification
have proven inadequate in preventing the purchase by minors of age-restricted
Internet-distributed products and services;
(4) many providers of Internet-distributed age-restricted products and
services are located in foreign jurisdictions and are beyond the reach
of United States laws; and
(5) the anonymity of purchases of Internet-distributed age-restricted
products and services perpetuates the easy access of such products and
services by minors.
SEC. 3. REGULATION OF ACCEPTANCE OF PAYMENT SYSTEM INSTRUMENTS, CREDIT
CARDS, OR FUND TRANSFERS FOR INTERNET-DISTRIBUTED PRODUCTS AND SERVICES
HARMFUL TO MINORS.
(a) In General- Chapter 53 of title 31, United States Code, is amended by
adding at the end the following:
`SUBCHAPTER V--REGULATION OF FUNDING OF INTERNET-DISTRIBUTED PRODUCTS
AND SERVICES HARMFUL TO MINORS
`Sec. 5371. Definitions
`For purposes of this subchapter, the following definitions shall apply:
`(1) AUTHORIZED INTERNET PAYMENT PROCESSING BUSINESS- The term `authorized
Internet payment processing business' means any Internet payment processing
business that--
`(A) offers a regulated payment system for use by sellers of any Internet-distributed
age-restricted product or service;
`(B) facilitates any regulated transaction; and
`(C) is certified by and registered with the Office of Electronic Funding
Oversight as provided in section 5372.
`(2) AUTHORIZED MONEY RECEIVING BUSINESS- The term `authorized money receiving
business' means any financial institution that--
`(A) is subject to the provisions of subchapter II of chapter 53 of
title 31, United States Code;
`(B) receives monies from consumers in connection with the operation
of any regulated payment system;
`(C) facilitates the electronic transfer of funds from a consumer's
money market, checking, or savings account into a designated Internet
payment account; and
`(D) has physical properties within which an interactive age verification
process can be executed by an independent second party.
`(3) DESIGNATED INTERNET PAYMENT ACCOUNT- The term `designated Internet
payment account' means a financial account--
`(A) that is managed by an authorized internet payment processing business;
`(B) from which funds may be drawn electronically to pay for an Internet-distributed
product or service harmful to minors;
`(C) that holds funds that are received from the account owner by an
authorized money receiving business; and
`(D) that is owned by an individual whose identity and age have been
verified at least one time by an independent second party.
`(4) DIRECTOR- The term `Director' means the Director of the Office of
Electronic Funding Oversight of the Department of the Treasury, established
under section 5373.
`(5) FINANCIAL INSTITUTION- The term `financial institution' means a State
or National bank, a State or Federal savings and loan association, a mutual
savings bank, a State or Federal credit union, or any other person who,
directly or indirectly, holds an account belonging to a consumer or business.
`(6) INDEPENDENT SECOND PARTY- The term `independent second party' means
any person who is employed by a private business and trained to verify
the identity and age of a consumer using a valid government-issued identification
card or equivalent identifying documentation bearing the consumer's birth
date or indication of age, which is presented by the consumer at the request
of such person.
`(7) INTERACTIVE AGE VERIFICATION PROCESS- The term `interactive age verification
process' means any age verification process employing any sequence of
actions by which a consumer's identity and age are verified by an independent
second party at the time funds are first added to a designated Internet
payment account.
`(8) INTERNET- The term `Internet' means the international computer network
of interoperable packet switched data networks.
`(9) INTERNET-DISTRIBUTED PRODUCT OR SERVICE HARMFUL TO MINORS- The term
`Internet-distributed product or service harmful to minors' means any
product or service that--
`(A) is harmful to minors; and
`(B) is offered for sale over the Internet.
`(10) INTERNET PAYMENT PROCESSING BUSINESS- The term `Internet payment
processing business' means any payment processing business that facilitates
the settlement of payments by any means between--
`(A) any bank, credit card, or other financial institution account of
a consumer of Internet-distributed products or services; and
`(B) any financial institution account, domestic or foreign, controlled
by the seller of the Internet-distributed product or service.
`(11) MINOR- The term `minor' means an individual who has not attained
the age of 17.
`(12) OFFICE- The term `Office' means the Office of Electronic Funding
Oversight of the Department of the Treasury, established under section
5373.
`(13) PAYMENT PROCESSING BUSINESS FINANCIAL INSTITUTION- The term `payment
processing business financial institution' means any financial institution
that holds an account belonging to an Internet payment processing business.
`(14) PRODUCT OR SERVICE HARMFUL TO MINORS- The term `product or service
harmful to minors' means--
`(A) any picture, image, graphic image file, or other visual depiction
that--
`(i) taken as a whole and with respect to minors, appeals to a prurient
interest in nudity, sex, or excretion;
`(ii) depicts, describes, or represents, in a patently offensive way
with respect to what is suitable for minors, an actual or simulated
sexual act or sexual contact, actual or simulated normal or perverted
sexual acts, or a lewd exhibition of the genitals; and
`(iii) taken as a whole, lacks serious literary, artistic, political,
or scientific value as to minors;
`(B) any beverage in liquid form which contains not less than 0.05 percent
of alcohol by volume and is intended for human consumption;
`(C) any tobacco product, as such term is defined in section 5702 of
the Internal Revenue Code of 1986 (26 U.S.C. 5702);
`(D) any prescription drug product, as such term is defined in section
735 of the Federal, Drug, and Cosmetic Act (21 U.S.C. 379g); and
`(E) any other product or service determined to be harmful to minors
by the Attorney General of the United States.
`(15) REGULATED PAYMENT SYSTEM- The term `regulated payment system' means
any Internet payment processing system or method utilized by any seller
of any Internet-distributed age-restricted product or service that involves
the settlement of payments between the seller and the consumer of such
product or service.
`(16) REGULATED TRANSACTION- The term `regulated transaction' means any
transaction or transmittal involving any credit, funds, instrument, or
proceeds described in any paragraph of section 5374 which the recipient
is allowed to accept under section 5372.
`(17) RESTRICTED TRANSACTION- The term `restricted transaction' means
any transaction or transmittal involving any credit, funds, instrument,
or proceeds described in any paragraph of section 5374 which the recipient
is prohibited from accepting under section 5374.
`(18) SEXUAL ACT; SEXUAL CONTACT- The terms `sexual act' and `sexual contact'
have the meanings given such terms in section 2246 of title 18, United
States Code.
`(19) SECRETARY- The term `Secretary' means the Secretary of the Treasury.
`Sec. 5372. Age verification requirement for internet payment processing
businesses involving the purchase of internet-distributed products and services
harmful to minors
`(a) Age Verification Requirement- A regulated payment system complies with
the requirements under this subsection only if the system includes each
of the following:
`(1) An interactive age verification process.
`(3) A network of authorized money receiving businesses.
`(2) A designated Internet payment account for each consumer.
`(4) Procedures for funding each designated Internet payment account that
ensure that the consumer's identity and age are verified as follows:
`(A) Verification shall be made by an independent second party when
funds are first added to the designated internet payment account.
`(B) After verification under subparagraph (A), each time that funds
are added to the account--
`(i) in the case of a consumer who has a money market, savings, checking,
or other account in the same financial institution as the authorized
money receiving business, the consumer may direct the transfer of
money from his or her financial institution account to the designated
internet payment account; and
`(ii) in the case of a consumer who does not have a money market,
savings, checking, or other account in the same financial institution
as the authorized money receiving business, verification shall be
made using the same procedure that is used pursuant to subparagraph
(A) when funds are first added to the account.
`(b) Certification of Compliance-
`(1) EVALUATION AND CERTIFICATION OF REGULATED PAYMENT SYSTEMS- The Director
of the Office of Electronic Funding Oversight shall evaluate each regulated
payment system facilitating any regulated transaction for compliance with
the requirements under subsection (a) and shall certify each regulated
payment system that meets such requirements as so complying.
`(2) CERTIFICATION OF AUTHORIZED INTERNET PAYMENT PROCESSING BUSINESSES-
The Director shall issue a certificate of compliance to each Internet
payment processing business that offers a regulated payment system that
is certified pursuant to paragraph (1).
`(3) CERTIFICATION PROGRAM- The Director shall carry out a program for
certifying authorized Internet payment processing businesses and shall
issue such regulations as necessary to comply with the requirements of
this subchapter.
`(1) REQUIREMENT- The Director shall register with the Office each authorized
Internet payment processing business that is issued a certificate of compliance
under subsection (b)(2).
`(2) REGISTRATION PROGRAM- The Director shall carry out a program for
registering authorized Internet payment processing businesses and shall
issue such regulations as necessary to comply with the requirements of
this subchapter.
`(d) Coordinating Regulations-
`(1) COORDINATION WITH EXISTING LAWS- The Director shall, where appropriate
and in coordination with the Attorney General of the United States, coordinate
the provisions of this subchapter with existing United States laws and
regulations.
`(2) REGULATIONS- The Director may issue coordinating regulations as appropriate
under subsection (1).
`Sec. 5373. Office of Electronic Funding Oversight; policies and procedures
to identify and prevent restricted transactions
`(a) Establishment in Treasury-
`(1) IN GENERAL- There is established within the Department of the Treasury
the Office of Electronic Funding Oversight, the purposes of which are--
`(A) to coordinate Federal efforts to prohibit restricted transactions;
`(B) to develop controls necessary for regulated transactions; and
`(C) otherwise to carry out the duties specified in this subchapter.
`(2) DIRECTOR- The Office shall be headed by a Director, appointed by
the Secretary. The Director of the Office may serve as the designee of
the Secretary, at the request of the Secretary, for any purpose under
this subchapter.
`(b) Regulations- Not later than 270 days after the date of the enactment
of this subchapter, the Secretary, in consultation with the Board of Governors
of the Federal Reserve System and the Attorney General of the United States,
shall prescribe regulations that require--
`(1) each Internet payment processing business, and all participants therein,
to fully investigate the products and services offered by a seller of
Internet-distributed products and services, regardless of whether the
seller is domestic or foreign, prior to settling payments for the seller
on behalf of its customers through the establishment of policies and procedures
reasonably designed to--
`(A) ensure that the seller of Internet-distributed products and services
is conducting business lawfully; and
`(B) prevent the settlement of payments for any seller of any Internet-distributed
product or service harmful to minors if the Internet payment processing
business is not authorized to do so by the Director; and
`(2) each payment processing business financial institution, and all participants
therein, to fully investigate any Internet payment processing business,
regardless of whether the business is domestic or foreign, for which it
intends to hold accounts through the establishment of policies and procedures
reasonably designed to--
`(A) ensure that the Internet payment processing business is conducting
its business lawfully; and
`(B) prevent acceptance of accounts by any Internet payment processing
business that intends to settle payments for sellers of any Internet-distributed
product or service harmful to minors but is not authorized to do so
by the Director.
`(c) Requirements for Policies and Procedures- In prescribing regulations
pursuant to subsection (b), the Secretary shall identify types of policies
and procedures, including nonexclusive examples, which would be deemed,
as applicable, to be `reasonably designed to ensure' and `reasonably designed
to prevent' with respect to each seller of any Internet-distributed product
or service harmful to minors in the case of Internet payment processing
businesses or each Internet payment processing business in the case of Internet
payment processing business financial institutions.
`(d) Compliance With Internet Payment Processing Business Policies and Procedures-
An Internet payment processing business shall be considered to be in compliance
with the regulations prescribed under subsection (b), if such business relies
on and complies with policies and procedures--
`(1) to identify sellers of any Internet-distributed product or service
harmful to minors;
`(2) to ensure that payment settlements are executed on behalf of the
seller of any Internet-distributed product or service harmful to minors
only if such business is certified to do so by the Director; and
`(3) to ensure that payment settlements are executed on behalf of the
seller of any Internet-distributed product or service harmful to minors
only if such business is registered with the Office.
`(e) Compliance With Payment Processing Business Financial Institution Policies
and Procedures- A payment processing business financial institution shall
be considered to be in compliance with the regulations prescribed under
subsection (b), if such financial institution relies on and complies with
policies and procedures--
`(1) to identify Internet payment processing businesses that intend to
settle payments for sellers of any Internet-distributed product or service
harmful to minors; and
`(2) to ensure that no Internet payment processing business intending
to settle payments for sellers of any Internet-distributed product or
service harmful to minors and not certified by the Office in accordance
with section 5372 is permitted to open an account held by such financial
institution.
`(f) No Liability for Refusing to Process Payments for a Seller of Any Internet-Distributed
Product or Service Harmful to Minors- An internet payment processing business
that is subject to a regulation prescribed or order issued under this subchapter
and refuses to process transactions that such business reasonably believes
to be a restricted transaction, or as a member of an Internet payment processing
business relies on the policies and procedures of the business, in an effort
to comply with regulations prescribed under subsection (b), shall not be
liable to any party for such action.
`(g) No Liability for Refusing to Hold Accounts for a Non-Compliant Internet
Payment Processing Business- An internet payment processing business financial
institution that is subject to a regulation prescribed or order issued under
this subchapter and refuses to hold accounts for any Internet payment processing
business that such financial institution reasonably believes to be unlawfully
processing restricted transactions, or as a member of an Internet payment
processing business financial institution relies on the policies and procedures
of the financial institution, in an effort to comply with regulations prescribed
under subsection (b), shall not be liable to any party for such action.
`(h) Regulatory Enforcement- Regulations issued by the Secretary under this
subchapter shall be enforced by the Federal functional regulators and the
Federal Trade Commission, in the manner provided in section 505(a) of the
Gramm-Leach-Bliley Act.
`Sec. 5374. Prohibition on acceptance of any non-compliant bank instrument
for the purchase of internet-distributed products and services harmful to
minors
`An Internet payment processing business that is not in compliance with
the provisions of section 5372 may not knowingly process, in connection
with the purchase by a consumer of Internet-distributed products and services
harmful to minors--
`(1) credit, or the proceeds of credit, extended to or on behalf of the
consumer (including credit extended through the use of a credit card);
`(2) an electronic fund transfer, or funds transmitted by or through a
money transmitting business, or the proceeds of an electronic fund transfer
or money transmitting service, from or on behalf of a consumer;
`(3) any check, draft, or similar instrument which is drawn by or on behalf
of a consumer and is drawn on or payable at or through any financial institution;
or
`(4) the proceeds of any other form of financial transaction, as the Secretary
may prescribe by regulation, which involves a financial institution as
a payor or financial intermediary on behalf of or for the benefit of a
consumer.
`Sec. 5375. Limitations on liability relating to identity and age verification
`An authorized money receiving business, in the course of verifying the
identity and age of consumers as described in section 5372, shall not be
held liable by any party for any errors made by an authorized Internet payment
processing business in the course of settling payments made by a consumer
to a seller of any Internet-distributed product or service harmful to minors.
`Sec. 5376. Civil remedies
`(a) Jurisdiction- The district courts of the United States shall have original
and exclusive jurisdiction to prevent and restrain violations of this subchapter
or the rules or regulations issued under this subchapter by issuing appropriate
orders in accordance with this section, regardless of whether a prosecution
has been initiated under this subchapter.
`(1) INSTITUTION BY FEDERAL GOVERNMENT-
`(A) IN GENERAL- The United States, acting through the Attorney General
of the United States, or, in the case of rules or regulations issued
under this subchapter, through an agency authorized to enforce such
regulations in accordance with this subchapter, may institute proceedings
under this section to prevent or restrain a violation or a threatened
violation of this subchapter or such rules or regulations.
`(B) RELIEF- Upon application of the United States under this paragraph,
the district court may enter a preliminary injunction or an injunction
against any person to prevent or restrain a violation or threatened
violation of this subchapter or the rules or regulations issued under
this subchapter, in accordance with rule 65 of the Federal Rules of
Civil Procedure.
`(2) INSTITUTION BY STATE ATTORNEY GENERAL-
`(A) IN GENERAL- The attorney general (or other appropriate State official)
of a State in which a violation of this subchapter allegedly has occurred
or will occur may institute proceedings under this section to prevent
or restrain the violation or threatened violation.
`(B) RELIEF- Upon application of the attorney general (or other appropriate
State official) of an affected State under this paragraph, the district
court may enter a preliminary injunction or an injunction against any
person to prevent or restrain a violation or threatened violation of
this subchapter, in accordance with rule 65 of the Federal Rules of
Civil Procedure.
`(c) Expedited Proceedings- In addition to any proceeding under subsection
(b), a district court may, in exigent circumstances, enter a temporary restraining
order against a person alleged to be in violation of this subchapter or
the rules or regulations issued under this subchapter, upon application
of the United States under subsection (b)(1), or the attorney general (or
other appropriate State official) of an affected State under subsection
(b)(2), in accordance with rule 65(b) of the Federal Rules of Civil Procedure.
`(d) Factors to Be Considered in Certain Cases for Internet Payment Processing
Businesses- In considering granting relief under this section against any
Internet payment processing business, or any participant in a Internet payment
processing business that is not in compliance with the regulations issued
under this subchapter, the court shall consider--
`(1) the extent to which the person participating in the Internet payment
processing business knew or should have known that the transaction was
in connection with an Internet-distributed product or service harmful
to minors;
`(2) the history of such person participating in the Internet payment
processing business when such person knew or should have known that the
transaction is in connection with an Internet-distributed product or service
harmful to minors;
`(3) the extent to which such person has established and is maintaining
policies and procedures in compliance with rules and regulations issued
under this subchapter;
`(4) the extent to which it is feasible for any specific remedy prescribed
as part of such relief to be implemented by such person without substantial
deviation from normal business practice; and
`(5) the costs and burdens that the specific remedy will have on such
person.
`(e) Factors to Be Considered in Certain Cases for Internet Payment Processing
Business Financial Institutions- In considering granting relief under this
section against any Internet payment processing business financial institution,
or any participant in an Internet payment processing business financial
institution that is not in compliance with the regulations issued under
this subchapter, the court shall consider--
`(1) the extent to which the person participating in the Internet payment
processing business financial institution knew or should have known that
the Internet payment processing business was settling payments for Internet-distributed
products or services that are harmful to minors and was not in compliance
with the regulations issued under this subchapter;
`(2) the history of such person participating in the Internet payment
processing business financial institution when such person knew or should
have known that the Internet payment processing business was settling
payments for Internet-distributed products or services that are harmful
to minors and was not in compliance with the regulations issued under
this subchapter;
`(3) the extent to which such person has established and is maintaining
policies and procedures in compliance with rules and regulations issued
under this subchapter;
`(4) the extent to which it is feasible for any specific remedy prescribed
as part of such relief to be implemented by such person without substantial
deviation from normal business practice; and
`(5) the costs and burdens that the specific remedy will have on such
person.
`(f) Notice to Regulators and Financial Institutions- Before initiating
any proceeding under subsection (b), with respect to a violation or potential
violation of this subchapter or the rules or regulations issued under this
subchapter by any Internet payment processing business or Internet payment
processing business financial institution, the Attorney General of the United
States, an attorney general (or other appropriate State official) of a State,
or an agency authorized to initiate such proceeding under this subchapter,
shall--
`(1) notify such business or financial institution, and the appropriate
regulatory agency (as determined in accordance with section 5373(h) for
such business or financial institution) of such violation or potential
violation and the remedy to be sought in such proceeding; and
`(2) allow such business or financial institution not longer than 60 days
to implement a remedy for the violation or potential violation, consistent
with the factors described in subsection (d) or (e), and in conjunction
with such action as the appropriate regulatory agency may take, if such
business or financial institution takes reasonable steps within that 60-day
period to prevent the occurrence of such violation or potential violation
pending implementation of such remedy.
`Sec. 5377. Criminal penalties
`Whoever violates any provision of this subchapter or the rules or regulations
issued under any provision of this subchapter shall be fined under title
18, United States Code, or imprisoned for not more than 5 years, or both.'.
(b) Clerical Amendment- The table of sections at the beginning of chapter
53 of title 31, United States Code, is amended by adding at the end the
following:
`SUBCHAPTER V--REGULATION OF FUNDING OF INTERNET-DISTRIBUTED PRODUCTS
AND SERVICES HARMFUL TO MINORS
` 5372. Age verification requirement for internet payment processing businesses
involving the purchase of internet-distributed products and services harmful
to minors.
` 5373. Office of Electronic Funding Oversight; policies and procedures
to identify and prevent restricted transactions.
` 5374. Prohibition on acceptance of any non-compliant bank instrument
for the purchase of internet-distributed products and services harmful
to minors.
` 5375. Limitations on liability relating to identity and age verification.
` 5377. Criminal penalties.'.
END
