Protecting Our Children from Age-Restricted Internet Products and Services Act of 2006 - Requires Internet payment processing businesses used by sellers of age-restricted products or services harmful to minors (under age 17) to include: (1) an interactive age verification process; (2) a network of authorized money receiving businesses; (3) a designated Internet payment account for each customer; and (4) procedures for ensuring that the customer's identity and age are independently verified.
Establishes in the Department of the Treasury the Office of Electronic Funding Oversight to coordinate federal efforts to prevent minors from purchasing age-restricted products or services on the Internet.
Prohibits noncompliant Internet payment processing businesses from processing financial transactions for the purchase of age-restricted products or services harmful to minors.
Authorizes the Attorney General or any state Attorney General to apply for an injunction or temporary restraining order to prevent or restrain a violation of this Act.
Imposes a fine and/or prison term of up to five years for violations of this Act.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6299 Introduced in House (IH)]
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.
``(c) Registration .--
``(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.
``(b) Proceedings.--
``(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
`` 5371. Definitions.
`` 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.
`` 5376. Civil remedies.
`` 5377. Criminal penalties.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Referred to the Subcommittee on Financial Institutions and Consumer Credit.
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