[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>