    [House Hearing, 108 Congress]
    [From the U.S. Government Publishing Office]

        OVEREXPOSED: THE THREATS TO PRIVACY AND SECURITY ON FILESHARING
                                    NETWORKS

    =======================================================================

                                    HEARING

                                   before the

                                  COMMITTEE ON
                               GOVERNMENT REFORM

                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED EIGHTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  MAY 15, 2003

                                   __________

                               Serial No. 108-26

                                   __________

           Printed for the use of the Committee on Government Reform

      Available via the World Wide Web: http://www.gpo.gov/congress/house
                          http://www.house.gov/reform

                                     ______

    88-016              U.S. GOVERNMENT PRINTING OFFICE
                                WASHINGTON : 2003
    ____________________________________________________________________________
    For Sale by the Superintendent of Documents, U.S. Government Printing Office
    Internet: bookstore.gpr.gov  Phone: toll free (866) 512-1800; (202) 512�091800
    Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001

                         COMMITTEE ON GOVERNMENT REFORM

                         TOM DAVIS, Virginia, Chairman
    DAN BURTON, Indiana                  HENRY A. WAXMAN, California
    CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
    ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
    JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
    JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
    MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
    STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
    DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
    RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
    JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
    TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
    CHRIS CANNON, Utah                   DIANE E. WATSON, California
    ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
    EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
    JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
    JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER,
    NATHAN DEAL, Georgia                     Maryland
    CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of
    TIM MURPHY, Pennsylvania                 Columbia
    MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
    JOHN R. CARTER, Texas                CHRIS BELL, Texas
    WILLIAM J. JANKLOW, South Dakota                 ------
    MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont
                                             (Independent)

                           Peter Sirh, Staff Director
                     Melissa Wojciak, Deputy Staff Director
                          Rob Borden, Parliamentarian
                           Teresa Austin, Chief Clerk
                  Philip M. Schiliro, Minority Staff Director

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on May 15, 2003.....................................     1
    Statement of:
        Broes, Derek S., executive vice president of Worldwide
          Operations, Brilliant Digital Entertainment................    59
        Davidson, Alan B., associate director, Center for Democracy
          and Technology.............................................    39
        Farnan, James E., Deputy Assistant Director, Cyber Division,
          Federal Bureau of Investigation, accompanied by Dan Larkin,
          Supervisory Special Agent, Federal Bureau of Investigation.    89
        Frank, Mari J., esquire, Mari J. Frank, Esquire & Associates.    66
        Good, Nathaniel S., University of California, Berkeley,
          School of Information Management Systems...................    13
        Hale, Dr. John, assistant professor of computer science and
          director, Center for Information Security, the University
          of Tulsa...................................................    31
        Schiller, Jeffrey I., network manager/security architect,
          Massachusetts Institute of Technology......................    25
    Letters, statements, etc., submitted for the record by:
        Broes, Derek S., executive vice president of Worldwide
          Operations, Brilliant Digital Entertainment, prepared
          statement of...............................................    62
        Davidson, Alan B., associate director, Center for Democracy
          and Technology, prepared statement of......................    41
        Davis, Chairman Tom, a Representative in Congress from the
          State of Virginia, prepared statement of...................     3
        Farnan, James E., Deputy Assistant Director, Cyber Division,
          Federal Bureau of Investigation, prepared statement of.....    91
        Frank, Mari J., esquire, Mari J. Frank, Esquire & Associates,
          prepared statement of......................................    69
        Good, Nathaniel S., University of California, Berkeley,
          School of Information Management Systems, prepared
          statement of...............................................    16
        Hale, Dr. John, assistant professor of computer science and
          director, Center for Information Security, the University
          of Tulsa, prepared statement of............................    34
        Schiller, Jeffrey I., network manager/security architect,
          Massachusetts Institute of Technology, prepared statement
          of.........................................................    27
        Waxman, Hon. Henry A., a Representative in Congress from the
          State of California, prepared statement of.................     7

        OVEREXPOSED: THE THREATS TO PRIVACY AND SECURITY ON FILESHARING
                                    NETWORKS

                                  ----------

                             THURSDAY, MAY 15, 2003

                              House of Representatives,
                                Committee on Government Reform,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:09 a.m., in
    room 2154, Rayburn House Office Building, Hon. Tom Davis of
    Virginia (chairman of the committee) presiding.
        Present: Representatives Tom Davis of Virginia, Shays,
    Putnam, Duncan, Murphy, Waxman, Maloney, Cummings, Tierney,
    Clay, Sanchez, and Ruppersberger.
        Staff present: Peter Sirh, staff director; Melissa Wojciak,
    deputy staff director; Keith Ausbrook, chief counsel; Anne
    Marie Turner and Randall Kaplan, counsels; David Marin,
    director of communications; Scott Kopple, deputy director of
    communications; Ken Feng, investigator/GAO detailee; Teresa
    Austin, chief clerk; Joshua E. Gillespie, deputy clerk; Corinne
    Zaccagnini, chief information officer; Brien Beattie, staff
    assistant; Phil Barnett, minority chief counsel; Karen
    Lightfoot, minority communications director/senior policy
    advisor; Josh Sharfstein and Nancy Scola, minority professional
    staff members; Earley Green, minority chief clerk; and Jean
    Gosa, minority assistant clerk.
        Chairman Tom Davis. Good morning. A quorum being present,
    the Committee on Government Reform will come to order.
        Let me say a special thank you to our visiting students
    from Woodson High School, out in the 11th Congressional
    District of Virginia. We are happy to have you with us, and I
    hope you will find some of this hearing interesting.
        We are here today to continue our examination into peer-to-
    peer file-sharing programs. This is the committee's second
    hearing on this topic.
        At our first hearing held in March, we examined the growing
    problem of the availability of pornography, including child
    pornography, on these networks. The committee found that
    pornography is, in fact, being traded on peer-to-peer networks,
    and children are at great risk of inadvertent exposure to
    pornography while using these programs.
        File-sharing programs or Internet applications allow users
    to download and directly share electronic files from other
    users on the same network. Users of these programs can share
    files that contain documents, as well as music or videos. These
    programs are surging in popularity.
        KaZaA, the most popular file-sharing program has been
    downloaded almost 225 million times, making it the most popular
    software downloaded on the Internet.
        File-sharing technology can be beneficial. However, as we
    learned from our first hearing on this topic, use of this
    technology also presents certain risks. Today, the committee
    will examine the risks to personal privacy and computer
    security posed by the use of peer-to-peer file-sharing
    programs.
        Specifically, we are going to look at three issues: first,
    the reason why highly personal information is available over
    these networks; second, the potential effects of software known
    as ``spyware'' or ``adware'' that is being bundled or included
    with file-sharing programs; and third, the growing risk of
    downloading computer viruses from files shared on these
    programs.
        The committee will release a staff report today that
    highlights these issues. Through a simple search on one file-
    sharing program, committee staff easily obtained tax returns,
    medical records, attorney-client communications, resumes, and
    personal correspondence.
        Users of these programs may accidentally share this
    information because of incorrect program configuration. They
    also could be intentionally sharing these files because
    increased file-sharing earns the user higher priority status on
    popular downloads.
        Either way, users of these programs need to be aware that
    sharing personal information can open the door to identity
    theft, consumer fraud, or other unwanted uses of their personal
    data. Parents, businesses, and government agencies also need to
    be aware of these risks if their home or office computers
    contain file-sharing programs.
        Another concern raised by the use of peer-to-peer file-
    sharing is the bundling of these programs with software known
    as ``spyware'' or ``adware.'' These programs monitor Internet
    usage primarily for marketing purposes, without the users'
    knowledge. They also give rise to pop-up advertisements and
    spam e-mail.
        Finally, computer viruses can easily spread through file-
    sharing programs, since files are shared anonymously. In fact,
    just this week, a new computer virus called ``Fizzer'' spread
    rapidly across the Internet, affecting computers worldwide
    through e-mails and the file-sharing program, KaZaA.
        We have assembled an excellent panel of witnesses who will
    discuss these important issues. I would like to thank each of
    our witnesses for appearing today. I would now like to yield to
    Mr. Waxman for his opening statement.
        [The prepared statement of Chairman Tom Davis follows:]

        [GRAPHIC] [TIFF OMITTED] T8016.001

        [GRAPHIC] [TIFF OMITTED] T8016.002

        Mr. Waxman. Thank you very much, Mr. Chairman. I am pleased
    to join with you in this hearing. I want to commend our staff
    for developing this report that we issued today, ``File-Sharing
    Programs and Peer-to-Peer Networks, Privacy and Security
    Risks.''
        This is the second of a series of hearings that this
    committee has been holding to highlight and educate the public
    about not just the great opportunities with these new file-
    sharing efforts on the computers, but the risks involved, as
    well.
        At our last hearing, we talked about the fact that if young
    people, who are, for the most part, the ones who are using
    these peer-to-peer file-sharing programs, try to get music from
    the programs, more often than not, they are having very vile
    pornography pushed upon them.
        Most parents were not aware of that fact; and most people,
    I think, are not aware of the facts that we are going to
    examine at our hearing today.
        We live in a world that is increasingly more connected. New
    computer innovations can open us up to new experiences and
    offer more choices than ever before. As we experiment with new
    technologies, however, we must recognize their risks. In the
    real world, we know how to guard our privacy and security
    carefully. It is just as important to do so in the on-line
    world.
        So in this hearing, we are going to look at these very
    incredibly popular programs. In fact, the most popular of these
    file-sharing programs, KaZaA, has been downloaded more than 220
    million times. That is really incredible, 22 million times in
    the last 2 months alone.
        Despite their soaring popularity, few people understand the
    risks that these new file-sharing programs can pose. In large
    part, this is due to what I call the on-line generation gap.
    The users of file-sharing programs are predominantly teenagers.
    The parents, however, and grandparents are too often left
    struggling just to keep up.
        In our report that we are releasing today, I think we have
    an opportunity to inform the parents and grandparents that when
    their kids use these file-sharing programs, they may find that
    inadvertently they are sharing incredibly personal files
    through these peer-to-peer networks.
        Our investigators found that they could find completed tax
    returns, medical records, and even entire e-mail in-boxes
    through simple searches using file-sharing programs. No one
    would want to share this kind of personal information, but in
    many cases, that is exactly what is happening.
        Due to the way some users configure their computers, their
    personal files can be accessed by millions of strangers through
    peer-to-peer networks. This invasion of privacy is not the only
    risk families face. Our report finds that when users download
    free file-sharing programs, they are also exposing their
    computers to hidden software called ``spyware'' or ``adware.''
        These programs track what you do online, the Web sites you
    look at, how long you stay on those Web sites, even your e-mail
    address. This zombie-like ware, which takes over the spare
    computing power of personal computers can be bundled with file-
    sharing programs.
        So not only can they get access to what is in your personal
    files, they can make your computer server a zombie for their
    own purposes. Besides tracking your computer habits, these
    programs can also cause software conflicts and computer
    crashes. In fact, in committee testing, these programs ruined a
    committee computer twice. Even the House's most experienced
    computer technicians could not restore the computers.
        The chairman mentioned that we are putting computers at
    risk for viruses and other damaging computer files, and we will
    have more testimony about that in our hearing.
        While technical innovation on the Internet is tremendously
    important, our purpose in holding these hearings and releasing
    these investigative reports is not to say that peer-to-peer
    technology is inherently bad. In fact, it may ultimately prove
    to have important and valuable uses.
        But there can be no question that this new technology, at
    least in its current incarnation, can create serious risks for
    users. Our purpose in holding these hearings is to help the
    public understand what these risks are. Without this knowledge,
    families and businesses simply will not be able to make
    intelligent decisions about the technology.
        [The prepared statement of Hon. Henry A. Waxman follows:]

        [GRAPHIC] [TIFF OMITTED] T8016.003

        [GRAPHIC] [TIFF OMITTED] T8016.004

        [GRAPHIC] [TIFF OMITTED] T8016.005

        [GRAPHIC] [TIFF OMITTED] T8016.006

        [GRAPHIC] [TIFF OMITTED] T8016.007

        Chairman Tom Davis. Thank you very much, and let me also
    commend the staff, and Mr. Waxman, your leadership in helping
    put these hearings together.
        Are there any other opening statements; the gentleman from
    Maryland?
        Mr. Ruppersberger. The information superhighway has opened
    many doors and opportunities, both in terms of communication
    and in terms of commerce. It gave us a .com boom in the mid-and
    late 1990's and helped us to make a more technologically
    advanced country.
        Now privacy on the Internet has been discussed in Congress
    since 1998. We have discussed what information needs to be
    protected. Is a disclosure policy a privacy policy? How do we
    protect it and how do we enforce it? Does Congress need to set
    standards, or do we let the industry decide what is best?
        As technology advances, we have to ask ourselves, if
    Government does promulgate regulations, will those regulations
    be able to keep up with the pace of technology?
        Now today we are discussing file-sharing networks like
    KaZaA and Morpheus. These networks allow subscribers to
    download and share music, photo and video clips with other
    subscribers. The question is, how safe are these networks?
        Can a hacker or an individual use networks to get around
    any firewalls and protections and invade persons' more personal
    files? Can they look at people's Quicken statements? Can they
    view saved e-mails and documents?
        Privacy is not just about personal information. The most
    important part is, we have to be able to be concerned about how
    those companies track and use what you download to market your
    items.
        Do these networks sell your information to retailers? Do
    they share them with spammers, companies that flood our e-mail
    with product information?
        At this time, I think we need legislation, but I am fearful
    whatever we write up in Congress will be obsolete within 1
    year.
        Can we legislate privacy? Yes, we can. Congress has done
    that. We have cable and video store privacy. We have financial
    privacy and we have medical privacy. Why not person-to-person
    network privacy? How about a strong Federal enforcement
    mechanism, based on violations of industry-based best practice
    standards?
        Now obviously, no one wants to harm the continued
    advancement of technology. But eventually there will be the
    need for a balance. There will be the need to assure people
    that your information is safe as you connect to the Internet as
    it travels through cyberspace.
        Thank you, Mr. Chairman.
        Chairman Tom Davis. Thank you very much.
        Does anyone else wish to make an opening statement?
        [No response.]
        Chairman Tom Davis. We will now move to our witnesses. We
    have Nathaniel Good from the University of California,
    Berkeley, who will be demonstrating for the committee how
    personal documents can easily be accessed from peer-to-peer
    file-sharing networks.
        Next, we have Jeffrey Schiller, who is network manager for
    the Massachusetts Institute of Technology. Following Mr.
    Schiller is Dr. John Hale, the director of the Center for
    Information Security at the University of Tulsa.
        We will then hear from Alan Davidson from the Center for
    Democracy and Technology; and then from Derek Broes, the
    executive vice president of Brilliant Digital Entertainment.
        Next is Mari Frank, who is an identity theft expert.
    Rounding out the panel is James Farnan, Deputy Assistant
    Director of the Federal Bureau of Investigations Cyber
    Division.
        It is the policy of this committee that all witnesses be
    sworn before they testify, so if you will rise with me and
    raise your right hands.
        [Witnesses sworn.]
        Chairman Tom Davis. Thank you very much; please be seated.
    We have a light in front. We have your total statements in the
    record that we have read. Your green light will be on for the
    first 4 minutes. In the 5th minute, an orange light will go
    with the red light, so at 5 minutes, we would appreciate your
    summing up.
        Your total testimony is in the committee record, and we
    will go from there. I think for our first witness, you are
    going to do a demonstration. We will cut a little slack on the
    time, but if we can get it down, then we can get to questions;
    thank you very much, Mr. Good.

       STATEMENT OF NATHANIEL S. GOOD, UNIVERSITY OF CALIFORNIA,
           BERKELEY, SCHOOL OF INFORMATION MANAGEMENT SYSTEMS

        Mr. Good. Thank you very much; good morning, Mr. Chairman
    and committee members. Thank you for the opportunity to appear
    before you today.
        In the brief amount of time that we have to talk to you
    about our study, we would like to give you a video
    demonstration of the problem that we found with KaZaA; describe
    how this problem can occur; and then talk about the possible
    solutions to this problem.
        On the screen in front of you is KaZaA. KaZaA is the most
    popular peer-to-peer file-sharing program on the Internet
    today. With KaZaA, you can look for any type of file, such as
    music, documents, videos. Any file that can be stored on your
    hard drive can be shared through the KaZaA network.
        To do this, one would download the application, type the
    key words that one is looking for into the search box, hit the
    return, and the results would pop up to the right to your
    search box.
        In this example, we will show how a user could get ahold of
    someone else's personal information through KaZaA by typing key
    words and looking for information from the search results.
        So in the first example that we have, we have a user who is
    looking for a file called ``inbox.dbx.'' Inbox.dbx is someone's
    e-mail file. As you can see, there have been a couple different
    results that we have returned.
        If we wanted to see what other files these people were
    sharing, we could go to that person's file. We could find more
    from that user, and we would see all the files that this person
    is sharing.
        So we can see there are other e-mail files that this person
    has. There is the ``sent'' files that this person has. There
    are a whole bunch of deleted items that we could download and
    restore and look at, and there is also the in-box and other
    personal pieces of information.
        So for the next search, we will be doing a slightly more
    sophisticated search, where we will be looking for an Excel
    spreadsheet that has possibly credit card information.
        In this demonstration, we will show how, if you know a
    little about what Excel is, that you know an Excel document has
    the extension ``XLS,'' and you think that someone would call
    their Excel document credit card, or something that begins with
    credit. You could type in these key words here, run a search,
    and this is what you would probably see, something very similar
    to this.
        So here we have a list similar to the list that we had
    earlier, where we had a bunch of files that were returned from
    various users. If we wanted to see some more files from an end
    user, we could click on a file there, type in find more from
    same user. Again, we would see all the fields that that person
    has shared.
        In this case, it looks like the person has pretty much
    shared most of their hard drive. There is again, the in-box
    file. This is the e-mail file we were talking about before.
    There are a whole bunch of system files. There are cookie
    files. If we scan over, we can see a little bit more detailed
    file information.
        We can sort by media type, so we can browse around and look
    for other types of information. So we can see that this person
    has certain spread sheets that pertain to salary structures.
    They have a PDF on tax returns. They have letters that they
    have written to people. They have an address book.
        If we keep browsing through, we will find that they have
    bonus agreements that they have sharing. There is a lot of
    stuff here that this person probably does not want the rest of
    the world to download.
        We also have the credit card activity, the spreadsheet that
    we talked about earlier. There is quite a bit, as you can see;
    office documents and there is the credit card file, again.
    There is another one.
        Here, we also have a password list which, unfortunately,
    probably contains all the passwords that this person has to get
    into various Web sites or corporate sites. People typically
    keep their passwords in a document, because they have to
    remember so many of them.
        So if we downloaded this, we probably would be able to hop
    around to various Web sites and jump into this person's
    accounts and such.
        So this is pretty much the problem that we discovered on
    KaZaA. We determined that through a series of user studies and
    analyzing the interface, that this problem could occur because
    parts of the KaZaA application could be very confusing to
    users, and it relied very heavily on some unstated assumptions.
        In some cases, it was possible for the user to think that
    what they were sharing was completely different than what was
    actually being shared.
        There are too many details to cover in the time that we
    have allocated, but if you were able to go over the research
    report that we have and our written testimony, you should be
    able to get more details about how this problem could possibly
    occur.
        As for solutions, we see two possible paths that we could
    take. The first is education. It is important for people to
    understand that what peer-to-peer can share, and more
    generally, what it means to be connected to a network in terms
    of privacy and security.
        We would also like to see stronger default settings and
    better explanations of what is going on in the program. It is
    important that applications should be safest right out of the
    box.
        Security and convenience are typically seen as tradeoffs of
    one another. As the world becomes more networked and more
    devices are able to store, collect, and share private
    information, it is crucial that we find ways for applications
    to be secure without sacrificing convenience and vice versa.
        Thank you very much for your time.
        [The prepared statement of Mr. Good follows:]

        [GRAPHIC] [TIFF OMITTED] T8016.008

        [GRAPHIC] [TIFF OMITTED] T8016.009

        [GRAPHIC] [TIFF OMITTED] T8016.010

        [GRAPHIC] [TIFF OMITTED] T8016.011

        [GRAPHIC] [TIFF OMITTED] T8016.012

        [GRAPHIC] [TIFF OMITTED] T8016.013

        [GRAPHIC] [TIFF OMITTED] T8016.095

        [GRAPHIC] [TIFF OMITTED] T8016.096

        [GRAPHIC] [TIFF OMITTED] T8016.097

        Chairman Tom Davis. Thank you very much.
        Mr. Schiller.

      STATEMENT OF JEFFREY I. SCHILLER, NETWORK MANAGER/SECURITY
            ARCHITECT, MASSACHUSETTS INSTITUTE OF TECHNOLOGY

        Mr. Schiller. Good morning and thank you for inviting me.
        Chairman Tom Davis. Thank you.
        Mr. Schiller. I am actually not going to read my statement,
    but I will tell you essentially what is in there. I have been
    involved in the Internet since the day it was born which was,
    we say, January 1, 1983, and there is a story behind that.
        It is funny, I remember, e-mail was the application that
    everybody said was the forbidden application, because it was a
    waste of network bandwidth. So here we are today with e-mail
    being one of the killer applications, and we are looking at
    another application that causes us a bit of concern.
        From my view as a security expert, I can tell you that my
    professional assessment is that these programs, peer-to-peer
    file-sharing, particularly once they are perfected, are not
    significantly more dangerous, from an end users perspective,
    than any other technology they use.
        Just as we have seen here today, KaZaA can be used to
    reveal private information. I have certainly received in my e-
    mail inbox private information that was sent via e-mail, due to
    various viruses and worms that people have caught. Because of
    who I am, I net a lot of that sort of stuff, and it is pretty
    amazing what you can get.
        So I try to say, what is the difference between a file-
    sharing program that we have today and some of the traditional
    technology that we have on the Internet, such as e-mail and Web
    browsing?
        One of the key differences is that file-sharing is still
    under active development. The e-mail technology we use today
    was standardized many years ago, and it does not change.
        As a manager of a network, if I wish to control e-mail, if
    I wish to set up a firewall that examines incoming e-mail
    messages to make sure they do not contain viruses or worms, I
    can do that, but I can be pretty assured that my e-mail
    scanning will, in fact, happen as it is supposed to.
        However, file-sharing programs are programs that are
    currently under active development. As some of us who run
    networks try to put in ways of controlling them, the authors of
    these programs in their newest versions put in ways to get
    around those controls.
        So one of the ways that peer-to-peer file-sharing
    significantly differs from the more traditional applications is
    the intent to subvert third party controls. That is inherent in
    them. That is not inherent in other technologies.
        So as a network manager, one of my concerns with peer-to-
    peer file-sharing is its use of our precious bandwidth, which
    we pay dearly for; and there are various tactics that we can do
    to try to limit the use of that bandwidth. What happens next,
    of course, is the next version of these programs, those various
    techniques to avoid that rate limiting.
        Without going into a lot of technical detail, one of the
    things we have been seeing is what I call ``port hopping.''
    Most Internet applications use a well known port. E-mail
    travels over port 25, for example; file transfer over port 21,
    Web browsing over port 80.
        Well, in their early days, most file-sharing programs had
    well known ports. I use port 1214, for example, and by
    controlling access to that port, we could control its use.
        What we are seeing more and more of are programs that hop
    around. They might use port 1214 for a few minutes, and then a
    few minutes later, we see a lot of traffic on some other
    literally randomly chosen port. With applications that do this,
    it becomes very difficult to actually know what is going on and
    control it.
        We have also seen applications that appear to be encrypting
    their content; not to hide it from any eavesdropper, but to
    make it difficult again for us to figure out, oh, this is file-
    sharing programs. There are many such programs that do this.
    KaZaA is not the only one.
        So my point today is that one of the things that makes
    these things just a bit more dangerous than other things is the
    attempt to subvert third parties.
        Particularly in an environment where you have end users who
    are not necessarily experts, who leave themselves exposed, we
    have many places where we try to use firewalls at the corporate
    level to protect people, and that is being subverted.
        Now like everything, many things are a two-edged sword.
    Sometimes, the third parties trying to control access to the
    network are not necessarily what we could consider good guys.
        The same technology that a corporation can use to control
    access can be used by governments that wish to suppress their
    people, and peer-to-peer file-sharing programs can often be
    used as a way of spreading the work, without it being
    controlled. But like all things, it is a two-way street, thank
    you.
        [The prepared statement of Mr. Schiller follows:]

        [GRAPHIC] [TIFF OMITTED] T8016.014

        [GRAPHIC] [TIFF OMITTED] T8016.015

        [GRAPHIC] [TIFF OMITTED] T8016.016

        [GRAPHIC] [TIFF OMITTED] T8016.017

        Chairman Tom Davis. Thank you very much.
        Dr. Hale.

      STATEMENT OF DR. JOHN HALE, ASSISTANT PROFESSOR OF COMPUTER
      SCIENCE AND DIRECTOR, CENTER FOR INFORMATION SECURITY, THE
                          UNIVERSITY OF TULSA

        Mr. Hale. Mr. Chairman, Ranking Minority Member Waxman, and
    members of the committee, thank you for giving me the
    opportunity to testify today on a topic that is of growing
    concern to the network security community, to American
    businesses and schools and, in fact, anyone that uses the
    Internet.
        I am an Assistant Professor of Computer Science at the
    University of Tulsa, and serve there as the Director of its
    Center for Information Security.
        Over the past 5 years, I have watched peer-to-peer
    technology make a startling transition from the backwaters of
    computer science to mainstream society. This March, Sharman
    Networks hit the 200 million mark for downloads of its popular
    KaZaA Media Desktop.
        File-sharing softwares are in homes, businesses, and
    schools across the world, connecting users in a peer-wise
    architecture that is both resilient and efficient. Peer-to-peer
    networking has grown faster than the Internet itself, reaching
    a much broader audience at this stage of its development.
        But there is a downside to placing such a potent technology
    in the hands of novice users. A peer-to-peer client exposes a
    computer to new threats, and some of the practices of its
    developers magnify the risk.
        The prevalence of spyware in peer-to-peer clients is but
    one example. Developers bundle spyware in their clients to
    generate revenue. One company maintains that it is
    ``intrigral'' to the operation of their product.
        Of course, there is no inherent functional dependency
    between advertising and file-sharing. Intrigral then means that
    the peer-to-peer software has been deliberately engineered so
    that it will not function without the spyware active.
        To avoid detection, spyware often hides in system folders
    or runs in the background. Amazingly, some spyware components
    remain on a system long after the original application is
    removed and will even imbed themselves in a host, despite an
    aborted installation of a carrier program.
        Spyware imbedded in clients sometimes downloads executable
    code without user knowledge. Even if the code is not malicious,
    it may contain flaws that render a system vulnerable to attack.
    More importantly, the clandestine nature of the software makes
    detection and remediation extremely challenging.
        Peer-to-peer is also commonly designed to circumvent
    network security services. Techniques such as tunneling, port
    hopping, and push request messages make it difficult to detect
    and filter peer-to-peer traffic.
        HTTP tunneling, in which peer-to-peer communications are
    disguised as Web traffic, is popular because such traffic often
    travels freely across networks. To this end, tunneling not only
    helps violate a network security policy by enabling forbidden
    applications, but also expands the network perimeter in ways
    unknown to system administrators.
        Another trick used by some of the most popular peer-to-peer
    clients is to vary communication ports, a technique called port
    hopping. This thwarts blocking and scanning software that
    identifies network services, based on well-known port
    assignments, as described previously.
        Push request messages in the Gnutella protocol are used to
    circumvent firewalls. Instead of a client pulling a file to it,
    it asks the host behind the firewall to push the file out. This
    is all transparent to the user, but it constitutes a subtle
    collusion between the two clients to violate a security policy.
        Another concern is how flaws in clients can increase
    exposures in a network, leaving it vulnerable to hackers.
    Exploitable weaknesses in peer-to-peer software have been
    identified, and in some cases, the media files themselves can
    enable an attack.
        There is nothing special about peer-to-peer clients that
    makes them any more flawed than other software. However,
    several factors conspire to amplify the risks they induce.
        They engender massive ad hoc connectivity across network
    domains. Hosts are exposed to every user on a peer-to-peer
    network. More than that, they allow users to share files
    pseudo-anonymously. Often, clients, themselves, are installed
    from peers on a network.
        In short, peer-to-peer file-sharing exposes systems to
    untrusted hosts and software, and offers little in the way of
    protection.
        Worms and viruses are also very real threats. The most
    recent example is the Fizzer virus, a blended attack that
    propagates via e-mail and KaZaA.
        Another is the Duload worm, which hides in a system folder,
    and alters the registry so that runs it startup. But it then
    copies itself to several provocatively named files within a
    folder that it exposes to the peer-to-peer network. Since
    Duload relies on human interaction, it is more of a virus than
    a worm.
        So Internet worms that target Web and data base servers
    actually provide better insight of the real potential. Code Red
    infected almost 400,000 Internet hosts within 14 hours, causing
    an estimated $2.6 billion in damage. Nimda infected 2.2 million
    hosts. The Slammer worm, by comparison, only affected 200,000
    hosts, but set new speed records, infecting 90 percent of its
    victims in under 10 minutes.
        A true peer-to-peer worm can infect an entire network with
    similar speed. More importantly, the obstacles for remediation
    indicate that it would have tremendous staying power, re-
    infected unpatched hosts and infecting new ones as they came
    on-line.
        There is a role for technology to play in addressing these
    problems, but it is only a small piece of the solution. Users
    have to be made aware of the risks of file-sharing. Developers
    must live up to higher standards of integrity and transparency
    for the software they develop.
        We cannot predict the next Code Red or Nimda. But if and
    when it strikes peer-to-peer networks, I hope we do not look
    back and see a missed opportunity to lead a promising
    technology out a turbulent period in its development; thank
    you.
        [The prepared statement of Mr. Hale follows:]

        [GRAPHIC] [TIFF OMITTED] T8016.018

        [GRAPHIC] [TIFF OMITTED] T8016.019

        [GRAPHIC] [TIFF OMITTED] T8016.020

        [GRAPHIC] [TIFF OMITTED] T8016.021

        [GRAPHIC] [TIFF OMITTED] T8016.022

        Chairman Tom Davis. Thank you very much.
        Mr. Davidson.

     STATEMENT OF ALAN B. DAVIDSON, ASSOCIATE DIRECTOR, CENTER FOR
                        DEMOCRACY AND TECHNOLOGY

        Mr. Davidson. Mr. Chairman, Mr. Waxman, members of the
    committee, I am Alan Davidson, associate director of the Center
    for Democracy and Technology. CDT is a non-profit public
    interest group, based here in Washington, dedicated to
    promoting civil liberties and human rights on the Internet.
        Since its creation, CDT has been heavily involved in issues
    of on-line privacy and security, and we welcome the opportunity
    to testify today on a timely issue of privacy and security, the
    question of privacy on popular peer-to-peer file-sharing
    systems.
        We commend the committee for its thoughtful efforts on this
    and other topics related to peer-to-peer over the last few
    months and few years.
        Our top line is this. The use of file-sharing software
    certainly raises serious privacy issues for consumers and
    computer users, often through mistakes that the users make in
    sharing very sensitive personal information.
        At the same time, file-sharing technology can be very
    beneficial. It is new and changing, and it is largely in the
    control of the people who use it. So the most important thing
    that we can do is to inform people about the potential risks of
    sharing, and teach them how to use peer-to-peer safely. There
    are other things, as well, and I will go into that.
        As we have heard, peer-to-peer file-sharing systems are a
    computing phenomenon. They are among the most popular and
    downloaded computer programs today. Much of the concern that we
    have comes from the fact that these are systems that just a few
    years ago were used by a relatively small and savvy group of
    people. Today, they are being embraced by millions of users,
    many of whom do not have a lot of expertise.
        People who install these powerful tools need to be aware of
    the potential privacy and security risks that come from their
    use or their misuse. Among our top concern, first and foremost,
    and potentially most serious, is this issue of inadvertent
    sharing of sensitive personal information.
        I cannot do much better than the demo that you saw in
    trying to make it clear how it is possible, in some cases,
    probably too easy, for people to share personal files.
    Certainly, there is a lot of evidence that some people, at
    least, are doing this.
        A cautionary note, we need to keep this in perspective. We
    do not have a good set of data right now about how big a
    problem this is. There is not very much research in terms of
    quantifying how large a percentage of people are doing this.
    But certainly, for some people, this is a very real problem.
        Second, many file-sharing programs, as we have heard,
    contain spyware that communicates information for advertising
    or for other reasons, often without a user's knowledge.
        This is not a problem that peer-to-peer file-sharing
    networks have alone. This is a problem in many software
    programs for users. But whether in peer-to-peer or in other
    software, consumers deserve real notice and real choices about
    how their computers are going to communicate with third
    parties.
        A third issue for us are the legal risks that people face
    when using these systems and the privacy issues that can come
    with that.
        First of all, file traders who violate copyright laws face
    obvious legal risks. At the same time, we are concerned that at
    least one provision of the current law, which is the broad
    subpoena power that is granted to any copyright holder under
    Section 512(h) of the DMCA, too easily allows the identity of a
    peer-to-peer participant, or for that matter, any Internet
    user, to be unmarked wrongly or by mistake without their
    knowledge. That is something that we think Congress should
    address.
        So what do we do about all of these problems? First and
    foremost, and I think you have already heard some of this, the
    public and particularly the families of file trading minors
    need greater awareness of the potential risks of file-sharing.
        One example of how to do this is something that we have
    been working on, in collaboration with a number of other
    companies and public interest groups, which is the GetNetWise.
    It is a collaborative collection of tools for families seeking
    to protect their kids on-line. It is a Web site,
    GetNetWise.org, that is linked to by over 80,000 sites,
    including many major Internet providers, other public interest
    groups, Members of Congress including, I believe this
    committee, for which we are always grateful, and your tips on
    how to protect kids in peer-to-peer networks from adult
    content.
        First of all, there is a major new initiative in this
    project. I have attached to the back of my testimony some of
    the materials from that, to try to educate parents about how to
    keep their kids safe when using peer-to-peer networks.
        There are lots of tips. There are tips in some of the other
    sets of testimony that were put together. Those are the kinds
    of things that we need to do to really make parents and
    families aware of the risks that they may be facing.
        There are other things that can be done, as well. Another
    is that we must insist that fair information practices be
    obeyed in file-sharing software. Much more could be done to
    design these systems with better transparency and better
    control. Software producers should reject invasive spyware,
    unless they find ways to give people more notice and control.
        Finally, we do think that Congress should be looking at
    finding ways to add privacy protections to these DMCA subpoenas
    so that mistakes are not made.
        I think our bottom line is, we do not need to throw the
    baby out with the bath water. There are many benefits to some
    of these technologies. They are also facing their own moments
    of dislocation and concern.
        We look forward to working with Congress to find a way to
    make sure that privacy is protected without damaging what can
    be a very good source of innovation.
        [The prepared statement of Mr. Davidson follows:]

        [GRAPHIC] [TIFF OMITTED] T8016.023

        [GRAPHIC] [TIFF OMITTED] T8016.024

        [GRAPHIC] [TIFF OMITTED] T8016.025

        [GRAPHIC] [TIFF OMITTED] T8016.026

        [GRAPHIC] [TIFF OMITTED] T8016.027

        [GRAPHIC] [TIFF OMITTED] T8016.028

        [GRAPHIC] [TIFF OMITTED] T8016.029

        [GRAPHIC] [TIFF OMITTED] T8016.030

        [GRAPHIC] [TIFF OMITTED] T8016.031

        [GRAPHIC] [TIFF OMITTED] T8016.032

        [GRAPHIC] [TIFF OMITTED] T8016.033

        [GRAPHIC] [TIFF OMITTED] T8016.034

        [GRAPHIC] [TIFF OMITTED] T8016.035

        [GRAPHIC] [TIFF OMITTED] T8016.036

        [GRAPHIC] [TIFF OMITTED] T8016.037

        [GRAPHIC] [TIFF OMITTED] T8016.038

        [GRAPHIC] [TIFF OMITTED] T8016.094

        [GRAPHIC] [TIFF OMITTED] T8016.039

        Chairman Tom Davis. Thank you very much.
        Mr. Broes.

       STATEMENT OF DEREK S. BROES, EXECUTIVE VICE PRESIDENT OF
         WORLDWIDE OPERATIONS, BRILLIANT DIGITAL ENTERTAINMENT

        Mr. Broes. Thank you for inviting me. Chairman Davis,
    Representative Waxman, and members of the committee, I am Derek
    Broes. I am the executive vice president of Worldwide
    Operations for Brilliant Digital Entertainment and its
    subsidiary, Altnet.
        Altnet offers the largest secure commercial platform for
    distribution of digital content over peer-to-peer software-
    based networks.
        Under an exclusive agreement with Sharman Networks Limited,
    publisher of KaZaA Media Desk peer-to-peer application, Altnet
    reaches an estimated 75 million worldwide unique users per
    month. That is about twice the reach of America Online.
        With this reach, Altnet has become the largest distributor
    of rights-managed content over the Internet today. Altnet takes
    the issues before this committee very seriously. As you will
    hear in my testimony today, Altnet is leveraging its role as
    the market leader by spearheading efforts to make security and
    privacy over file-sharing networks a top priority.
        There is something very exciting about technology that
    allows tens of millions of people across the globe to
    simultaneously connect to each other. It is a true digital
    democracy.
        But as in any democracy, there are challenges that must be
    overcome, and moral and ethical standards to be established. As
    with any technology that reaches millions of people, there is a
    responsibility that every company must assume when creating an
    instant messenger, e-mail, peer-to-peer, online interactive
    games, chat rooms, or any technology designed to share digital
    words or files with anyone, any time, instantly.
        My past experience in the entertainment industry, combined
    with experience in Internet peer-to-peer security technologies,
    gives me a uniquely broad perspective on the issues before the
    committee here today.
        As the former CEO of Vidius, Inc., I built an Internet
    security company that creates products to monitor corporate
    networks for security risks associated with file-sharing
    applications that are run on company computers. In most cases,
    we found the risks solvable with simply company policy changes
    and minor network alterations.
        In addition to addressing corporate security risks, much of
    Vidius' work was dedicated to an in-depth technical analysis of
    peer-to-peer networks for such clients as the Motion Picture
    Association and the Recording Industry Association of America,
    and that was from an anti-piracy point of view.
        I firmly believe that it is the responsibility of peer-to-
    peer file-sharing companies to protectively protect the privacy
    and security of the users of their software application.
        While there are some unique challenges to making file-
    sharing programs applications more secure, which I will
    outline, it is important that we de-mystify these technologies
    and realize that the many protective security technologies that
    are already widely available.
        By simply adopting the standards commonly used by the World
    Wide Web such as Secure Socket Layer, Public Key Infrastructure
    [PKI], and Authentication Agents, file-sharing becomes much
    more secure.
        In addition to these, distributors of peer-to-peer
    applications should adopt standard user privacy policies, and
    take care to educate users as to how their applications works
    and how to be a safe and responsible user of that application.
        Beyond adopting industry standard security practices and
    policies, distributors of file-sharing applications must also
    address security challenges common to peer-to-peer and similar
    infrastructures.
        A publicized threat with file-sharing technology, as well
    as with e-mail and instant messenger technologies, is the
    spread of viruses. As you would expect, when files come from an
    anonymous and uncertified source, the risk of that file
    containing a virus is greatly increased.
        In addition, many file-sharing applications provide a tool
    to allow users to search their hard drives for files to share.
    If that tool is used incorrectly, users could inadvertently
    give access to their confidential files and folders.
        Allow me to review how Altnet meets the challenges from
    within the KaZaA Media Desktop peer-to-peer application, and
    how Sharman Networks, the owner and operator of KaZaA have
    reacted to various privacy and security issues over the past 18
    months.
        Altnet's patented technology called ``TrueNames'' ensures
    that only certified and authenticated files can be transferred
    by the Peer Enabler component of the Altnet application. This
    eliminates the risk of viruses when users download files from
    file-sharing networks that utilize this technology, such as the
    KaZaA Media Desktop.
        Sharman Networks has taken great care to protect users'
    privacy and security. As distributors of the most popular peer-
    to-peer application today, Sharman Networks has consistently
    led the field with security enhancements developed explicitly
    for the challenges of this new industry, including the peer-to-
    peer's first built-in anti-virus tool.
        KaZaA Media Desktop contains two layers of propriety virus
    protection technology. In addition, Bullguard, a well-known
    anti-virus software, is installed free with the KaZaA Media
    Desktop application, providing users with an additional layer
    of security and protection.
        Sharman has shown great commitment to ensure that any new
    malicious viruses that freeze or silence or otherwise
    compromise a user's PC and its information are detected by this
    software, as was with Fizzer.
        Altnet and Sharman Networks take every opportunity to
    encourage responsible and safe peer-to-peer usage through user
    education and via the default configuration of the software of
    the upcoming release.
        The nature of the decentralized peer-to-peer technology
    means that users are in control of the material they choose to
    share with others. Our goal is to provide them with the
    education and tools they need for safe and responsible use.
        Commercialization of the World Wide Web has lead to the
    creation and adoption of advanced security, privacy policies
    and protection technologies, and the evolution of file-sharing
    networks will follow that same path.
        The future technological benefits of peer-to-peer
    technology are only now being explored and include the
    voluntary creation of shared resource networks that will allow
    massive distributed computing and storage of a scale only
    dreamed about by the pioneering medical research and astronomy
    projects that have received publicity to date.
        These types of applications will give research labs the
    ability to share processing power with hundreds of thousands of
    computers and digitally crunch billions of numbers in a
    nanosecond.
        The technological benefits of such a program are
    undisputed. From medical research to rendering Toy Story part
    3, Altnet intends to lead the market by presenting an opt-in
    resource sharing program to users that will be defined by the
    highest principles of disclosure and consent.
        If file-sharing software companies understand and meet
    their responsibilities, and content companies support these
    positive and important initiatives, then companies such as
    Altnet will have the ability to find an audience, reduce
    piracy, offer vastly improved efficiencies in digital
    distribution, create instantly accessible global content sales
    and marketing channels, provide a variety of public services,
    distribute a movie, market an artist, and sell a game, all
    while turning a profit and protecting user privacy from within
    a secure environment.
        We welcome input from our peers and from this committee to
    insure that we continue to meet the responsibilities we have
    assumed. Thank you, Mr. Chairman, for the opportunity to
    participate in this important hearing today.
        [The prepared statement of Mr. Broes follows:]

        [GRAPHIC] [TIFF OMITTED] T8016.040

        [GRAPHIC] [TIFF OMITTED] T8016.041

        [GRAPHIC] [TIFF OMITTED] T8016.042

        [GRAPHIC] [TIFF OMITTED] T8016.043

        Chairman Tom Davis. Thank you very much.
        Ms. Frank.

     STATEMENT OF MARI J. FRANK, ESQUIRE, MARI J. FRANK, ESQUIRE &
                               ASSOCIATES

        Ms. Frank. Good morning, Chairman Davis, Ranking Member
    Waxman, honorable committee members and invited guests. Thank
    you for the opportunity to address you today.
        My name is Mari Frank, and I am attorney and the author of
    the ``Identity Theft Survival Kit'' and ``Privacy Piracy'' from
    Laguna Niguel, CA. I have brought copies of these for the
    committee to use.
        My identity was stolen in 1996 by an imposter who paraded
    as an attorney, robbing me of my profession, my credit, and my
    piece of mind. She obtained over $50,000 using my name, after
    going on-line to obtain my credit report.
        Your personal information, worth more than currency itself,
    can be used to apply for credit cards, mortgages, cell phones,
    insurance, utilities, products, and services, all without your
    knowledge.
        A fraudster can do anything you can do, and worse than
    that, they can do things you would not do, like commit crimes
    and terrorist activities.
        There are three motivations for identity theft. First is
    financial gain. An example: Robert is a high tech computer
    consultant who normally encrypts all his sensitive data on his
    computer.
        Unfortunately, his resume was not stored in an encrypted
    file. He suspects that his impersonator accessed his computer
    through a network, copied his resume, and used it to obtain a
    well paying job. When Robert applied for the same job, he was
    shocked to find out that another person with his name and
    credentials was already hired.
        The second reason is avoiding prosecution. Tom was laid off
    from a high paying job in the medical industry. He had great
    recommendations and felt sure that he would be re-hired. For 2
    years, he was denied position after position, after each
    company had performed a background check.
        Finally, Tom hired a private investigator that showed him
    that his criminal background included two DUIs and an arrest
    for murder, none of which belonged to him.
        The third reason someone commits identity theft is revenge.
    The first cyber-stalking case prosecuted in Orange County, CA
    turned out to be identity theft. A computer expert was angry
    when a woman he liked shunned his advances. So he impersonated
    her in a chat room, stating that she had fantasies of being
    raped. When he gave out her phone number and address, several
    men appeared at her door.
        There are many ways in which personal information can be
    obtained. According to the FTC, the Federal Trade Commission,
    72 percent of victims have no idea how their information was
    accessed.
        The new May 2003 California Public Research Study on Police
    and Identity Theft list the top sources of identity theft: mail
    theft, dumpster diving, unscrupulous employees, stolen or lost
    wallets, Internet fraud, burglary, friends, relations, phone
    scams, unethical use of public documents, shoulder surfing,
    medical cards and drivers licenses, and personal information
    sold by financial institutions.
        Since this hearing is focusing on the peer-to-peer file-
    sharing vulnerabilities and the potential of revealing
    sensitive information in our computers, I am going to give a
    few suggestions that are just lay person things.
        No. 1, research any program before installing it. No. 2,
    learn how to safely stop sharing your files and how to unblock
    wanted files from entering your computer. Three, if possible,
    when using peer-to-peer file-sharing on the Internet, use a
    computer that does not store personal information on it.
        Four, password protect and encrypt your sensitive files.
    Five, do not put any confidential information in your e-mail,
    unless they are encrypted. Next, be conscious about what
    information you share in your files at Web sites, in chat
    rooms, and in e-mail.
        Read the privacy policies of the Web site you deal with and
    try and understand them. Make sure you have updated virus
    protection on your computers, and do not assume that you are
    anonymous.
        Your confidential information is a valued commodity.
    Marketers, information brokers, and the financial industry,
    buy, transfer, and sell your aggregated profiles, including
    your income; credit-worthiness; buying, spending, and travel
    habits; health information, and much more.
        Intimate facts about your life are shared legally and
    illegally without your knowledge or consent. The loss of
    control over our personal information has led to the epidemic
    of identity theft.
        I applaud this committee for researching the perils posed
    by peer-to-peer file-sharing. It is important to acquire
    knowledge, security measures, and careful strategies to protect
    ourselves. Hopefully, divulging security flaws in peer-to-peer
    file-sharing and other technologies to the media and Congress
    will encourage companies to make user-friendly security a top
    priority.
        But peer-to-peer file-sharing may pose less of a theft of
    identity theft than the careless display of records at your
    doctor's office, the negligently piled tax returns left on your
    accountant's desk for the cleaning crew to review, the
    encrypted and unlocked cabinets with personnel files at work,
    the non-shredded trash bins behind banks, insurance agencies,
    and mortgage companies, and the hack data bases of credit card
    companies, financial companies, and universities and the like.
        To prevent identity theft, the burden should be on the
    credit granters who are in the unique position on the front end
    to take precautions and require verification of change of
    address, and refuse to issue to fraudsters.
        Unfortunately, quick, easy credit, pre-approved offers
    convenience checks, mass marketing of data bases and sloppy
    information handling make this a simple crime.
        I encourage this honorable committee to also investigate
    ways in which the financial industry and information brokers
    can better protect our security.
        Since Congress passed the Financial Modernization Act in
    1999, identity theft has skyrocketed. Whether on-line or
    offline, our sensitive information must be better protected to
    foster consumer trust, so that our economy and our society can
    flourish; thank you.
        [The prepared statement of Ms. Frank follows:]

        [GRAPHIC] [TIFF OMITTED] T8016.044

        [GRAPHIC] [TIFF OMITTED] T8016.045

        [GRAPHIC] [TIFF OMITTED] T8016.046

        [GRAPHIC] [TIFF OMITTED] T8016.047

        [GRAPHIC] [TIFF OMITTED] T8016.048

        [GRAPHIC] [TIFF OMITTED] T8016.049

        [GRAPHIC] [TIFF OMITTED] T8016.050

        [GRAPHIC] [TIFF OMITTED] T8016.051

        [GRAPHIC] [TIFF OMITTED] T8016.052

        [GRAPHIC] [TIFF OMITTED] T8016.053

        [GRAPHIC] [TIFF OMITTED] T8016.054

        [GRAPHIC] [TIFF OMITTED] T8016.055

        [GRAPHIC] [TIFF OMITTED] T8016.056

        [GRAPHIC] [TIFF OMITTED] T8016.057

        [GRAPHIC] [TIFF OMITTED] T8016.058

        [GRAPHIC] [TIFF OMITTED] T8016.059

        [GRAPHIC] [TIFF OMITTED] T8016.060

        [GRAPHIC] [TIFF OMITTED] T8016.061

        [GRAPHIC] [TIFF OMITTED] T8016.062

        [GRAPHIC] [TIFF OMITTED] T8016.063

        Chairman Tom Davis. Thank you very much.
        Mr. Farnan.

    STATEMENT OF JAMES E. FARNAN, DEPUTY ASSISTANT DIRECTOR, CYBER
     DIVISION, FEDERAL BUREAU OF INVESTIGATION, ACCOMPANIED BY DAN
         LARKIN, SUPERVISORY SPECIAL AGENT, FEDERAL BUREAU OF
                             INVESTIGATION

        Mr. Farnan. Good morning, I would like to thank Chairman
    Davis, Ranking Member Waxman and members of the committee for
    the opportunity to testify today.
        We welcome your committee's leadership in dealing with the
    serious security and privacy issues associated with identity
    theft and peer-to-peer sharing.
        My testimony today will address the activities of the FBI's
    Cyber Division, in relation to the Internet and identity theft.
        I have asked Supervisory Special Agent, Dan Larkin, Chief
    of our Internet Fraud Complaint Center to attend, and he will
    provide specific answers, should the committee have any
    questions about more technical matters with the Internet Fraud
    Complaint Center's role in this area.
        A May 8th cover story in the Washington Post is nothing new
    to Americans today. Another group was discovered in possession
    of a veritable factory of counterfeit credit cards, including
    newly made cards, credit card numbers downloaded from a major
    retail store, and 600 pages containing more than 40,000 alleged
    stolen names and credit card numbers.
        As the investigation continues, we will probably find that
    these criminals have affected the lives of hundreds of victims,
    perhaps destroying their credit and creating hardships that
    will take years to abate.
        These thefts could be the result of computer hacking,
    insider theft, and/or social engineering. Stolen information
    can also be sold and used to establish new identifies for
    fugitives or terrorists. In these cases, identity theft can
    have much more serious consequences.
        Identity theft is the fraudulent use of individual's
    personal identifying information. It is normally a component or
    end result of another crime. Victims of identity theft often do
    not realize that someone has stolen their identity until their
    credit has been ruined.
        Although we have received no complaints alleging identity
    theft by peer-to-peer to networks, some factors must be
    considered.
        Peer-to-peer networks primarily serve as a ``come and get
    it'' resource on the Internet. In using such a utility, the
    user specifically searches for the item they want; for example,
    music, images, or software.
        The most significant criminal activity involving peer-to-
    peer sharing centers largely on music and software privacy, an
    area in which the FBI has been working closely with the private
    industry.
        The FBI has also seen an increase in peer-to-peer sharing
    of child pornography files. Peer-to-peer networks are
    increasingly being identified as sources from which Trojans or
    back doors were installed on computers during downloads.
        Victims sometimes discovered that personal and financial
    information have been removed from their computer through the
    back door. It is becoming more common for ``bots'' or active
    Trojans to be installed during a peer-to-peer download.
        In these instances, the victim computer executes
    instructions from the ``bots'' creator. Active ``bots'' could
    also be used to retrieve sensitive information from victim
    computers in furtherance of identity theft schemes. A person
    using peer-to-peer utilities for unauthorized or illegal
    purposes is not as likely to tell the FBI that a back door was
    found on their system, or that as a result, certain personal or
    financial information may have been taken.
        Through the Internet Fraud Complaint Center [IFCC], the FBI
    has positioned itself at the gateway of incoming intelligence
    regarding a wide variety of cyber crime matters. The IFCC
    received 75,000 complaints in 2002, and is now receiving more
    than 9,000 complaints each month.
        We expect that number to increase significantly, as the
    American and international communities become more aware of our
    mission and capabilities.
        Later this year, the IFCC will be renamed as the Internet
    Crime Complaint Center, to more accurately reflect its mission.
    The center receives complaints about various Internet-based
    crimes, analyzes the complaints for common patterns and
    perpetrators, and then sends them the appropriate agency for
    investigation and prosecution.
        In summary, cyber crime continues to grow at an alarming
    rate, and identity theft is a major part of the increase.
    Criminals are only beginning to explore the potential of crime
    via peer-to-peer networks.
        The FBI is grateful for the efforts of your committee and
    others dedicated to the safety and security of our Nation's
    families and businesses. The FBI will continue to work with
    your committee and aggressively pursue cyber criminals as we
    strive to stay one step ahead of them in the cyber crime
    technology race.
        I thank you for your invitation to speak to you today, and
    on behalf of the FBI, I look forward to working with you on
    this very important topic; thank you.
        [The prepared statement of Mr. Farnan follows:]

        [GRAPHIC] [TIFF OMITTED] T8016.064

        [GRAPHIC] [TIFF OMITTED] T8016.065

        [GRAPHIC] [TIFF OMITTED] T8016.066

        [GRAPHIC] [TIFF OMITTED] T8016.067

        [GRAPHIC] [TIFF OMITTED] T8016.068

        [GRAPHIC] [TIFF OMITTED] T8016.069

        [GRAPHIC] [TIFF OMITTED] T8016.070

        [GRAPHIC] [TIFF OMITTED] T8016.071

        [GRAPHIC] [TIFF OMITTED] T8016.072

        [GRAPHIC] [TIFF OMITTED] T8016.073

        [GRAPHIC] [TIFF OMITTED] T8016.074

        [GRAPHIC] [TIFF OMITTED] T8016.075

        [GRAPHIC] [TIFF OMITTED] T8016.076

        [GRAPHIC] [TIFF OMITTED] T8016.077

        [GRAPHIC] [TIFF OMITTED] T8016.078

        [GRAPHIC] [TIFF OMITTED] T8016.079

        Chairman Tom Davis. Thank you very much. I thank all of you
    for your input into this. Let me just ask a general question of
    the panel. The testimony, I think, makes it clear that users of
    file-sharing programs can expose their most personal files to
    millions of strangers, many times without the knowledge of the
    person using the files.
        Is there general agreement among the witnesses that file-
    sharing programs can be confusing to configure, and that most
    people are unaware that they might be sharing their tax
    returns, credit card data and other confidential files on these
    networks? Is there a consensus on that?
        Mr. Farnan. I think so, yes.
        Mr. Davidson. I would just say that your mileage may vary,
    in the sense that different programs do have different
    capabilities or different defaults. So I think on the one hand,
    people should not get the feeling that if they use one of these
    things, they are automatically sharing everything on their hard
    drive. But the flip side of it is, I think the usability
    studies have shown that a lot of them could do a lot better
    job.
        Mr. Broes. Also, software companies across the board have
    taken this secure by default initiative, where the
    applications, when they install it, it is secure. In the past,
    not even Microsoft had done that.
        So now, today, the standards that everyone is practicing,
    including Sharman Networks and Altnet, is by the standard, once
    it is installed, it is locked, and then guides the user and
    allows the user to unlock it if they see fit.
        So for the most part, there are many peer-to-peer
    applications out there, primarily on the new Tele-base, that
    are very difficult to understand.
        Chairman Tom Davis. Obviously, an educated user is the best
    defense. I do not think there is any question about that. The
    level of sophistication of people using this is very different.
        How widespread is this problem? I mean, we see the
    potentials; we see an isolated case. Does the FBI have any data
    on how widespread it is? Do you have any feel for that?
        Mr. Farnan. Let me ask Mr. Larkin if he can address that
    particular question.
        Chairman Tom Davis. I am going to have to swear him in.
        [Witness sworn.]
        Mr. Larkin. Well, the problem is growing, but it is how we
    define the problem, I guess, as Mr. Farnan had indicated. What
    we see with the peer-to-peer networks is not so much identity
    theft. It is more intellectual property rights and software
    piracy and that kind of thing.
        Although we have not linked it to identity theft,
    specifically, we do have instances where there are Trojans and
    ``bots'' that have been downloaded, at a pretty high rate and a
    growing rate, giving the unscrupulous creator of that Trojan or
    that BOT the opportunity to come in and access information on
    that computer.
        Generally, though, it has not been the practice of those
    subjects out there to go in and look for that data. They are
    just looking for that computer to use, for some other high
    speed attack where they need that type of bandwidth for.
        Chairman Tom Davis. You only need a couple cases, and lives
    can be completely destroyed.
        Mr. Farnan. That is true.
        Chairman Tom Davis. Are there any other thoughts on that?
        Ms. Frank. I think the only other thing I would say is, it
    is so important to realize that most identity theft victims do
    not know where it is coming from. So what happens is, if they
    are sharing and somebody gets this information, they will never
    know, and it is very hard for even the FBI to know.
        Chairman Tom Davis. Mr. Broes, what steps is KaZaA taking
    to proactively protect their privacy and security of its users?
        Mr. Broes. Well, I cannot speak on behalf of Sharman
    Networks. But I can tell you that as a partner, we have
    encouraged them to look at every possible study, such as Mr.
    Good's study, and they have definitely taken that to heart.
        I think many of the things that he has discussed and many
    of the issues that we are discussing here today will be
    addressed in the very, very near future, in the future
    releases.
        Chairman Tom Davis. In general, are the file-sharing
    companies doing a good job educating users about the privacy
    and security risks? Are they doing a better job; are they on to
    this? What is the consensus on this?
        Mr. Broes. Well, I have recently come on board with Altnet.
    I would say that from my perspective, Sharman Networks, who run
    KaZaA Media Desktop, have been the most proactive in that.
        In the past, coming from the security and technology
    background, I was the one that was actually hired by the Motion
    Pictured Association, when they AA to do the analysis of the
    fast track network, before the legal action was taking place.
    So I had a unique look at this.
        I can tell you from what I have seen, they are taking the
    most proactive approach. I have encouraged it with some of the
    other peer-to-peer companies, such as LimeWare and Bearshare,
    with absolute resistance.
        Chairman Tom Davis. Thank you very much.
        Mr. Waxman.
        Mr. Waxman. Thank you, Mr. Chairman. I think most people do
    not realize, they are opening up their own files when they go
    to these peer-to-peer systems.
        Mr. Good, in your demonstration, were you actually
    downloading someone's personal files in real time?
        Mr. Good. No, during the demonstration, that was recorded
    beforehand. But no, we did not download anything. We just
    looked and browsed around.
        Mr. Waxman. So you can look and browse around. Is the
    reason that people have their personal files open for others to
    come in and look around because of the configuration process
    when they go to the peer-to-peer networks?
        Mr. Good. If I understand the question correctly, the
    question was, would people be sharing stuff other than by
    making a mistake? Is that correct?
        Mr. Waxman. Well, if you were going to go to a peer-to-peer
    network, I do not think you are asked the question, are you
    willing to open up all your files; or are you asking the
    question? Do people then check, yes, or are you able to check,
    no?
        Mr. Good. Yes, you are not asked directly, do you want to
    open up all your files. You are asked, what do you want to
    share with the network.
        There are various ways that they do it. Depending on the
    version, in earlier versions, they offered to search your hard
    drive for you.
        In different versions, just by default, they would not
    share anything. Then if you decided to change the download
    folder, you had to understand what it meant to change the
    download folder. Those assumptions were not stated explicitly.
    So it really depends.
        In the latest version that we downloaded a couple of days
    ago, it does offer to search to share your files. But it does
    not ask you that question directly, do you want to share
    everything or not.
        Mr. Schiller. If I may jump in?
        Mr. Waxman. Yes, Mr. Schiller.
        Mr. Schiller. Just last week, I asked my staff to do a
    trial run of downloading KaZaA, because I wanted to see how it
    worked these days because, of course, it keeps changing.
        We used a blank computer that was newly installed, fresh,
    what have you, and downloaded KaZaA. When we installed it, it
    did ask us the question, do you wish to search your hard drive
    for files to share. It offered to share the directory where
    those files are stored.
        I said to the guys doing this, you know, that means it is
    going to search for media files like MP3s and what have you.
    But then it is going to offer to share the directory that they
    are in, which might contain other files. Is it only going to
    share the MP3s or is it going to share all the other files?
        Now we are experts, and we did not know. I think most
    people would not think twice about it. So if you had an MP3 in
    your ``My Documents'' folder, and you also had your tax returns
    in your ``My Documents'' folder, I would bet even money that
    the chances are, both wind up being shared.
        Mr. Good. That is actually a really good point. I mean, it
    does not state the assumptions that it is using while it is
    sharing. While it is searching for folders to share, it does
    not state what those were. As Jeff has mentioned, even experts
    were not able to really tell what it was looking for.
        Mr. Davidson. Right; I think there are two issues. One is
    sort of what are the defaults; what is easy to do? It turns out
    that in a lot of these systems, it is very easy to share more
    than you might expect to.
        The other is that in a lot of these systems, you do have to
    take an affirmative step to share a lot of files, and
    particularly to share a whole drive.
        For example, a system that we tried out in our office did
    not give you any warning when you decided to share your whole C
    drive, as it were. There is a lot more that could be done in
    the design of this software, to make sure that people have some
    awareness that might not be a good idea.
        Mr. Waxman. As I understand it, on the KaZaA Network, users
    get priority for downloads, the more files they share, which is
    obviously an incentive for them to share more files. That could
    lead teenagers to share all of the sensitive files on their
    parents' computers.
        What steps, if any, does KaZaA take to ensure that all
    users of a particular computer know which files are being
    shared? Does anybody have any idea of that?
        Mr. Schiller. If I understand the question correctly, you
    are asking what measures are taken to educate the user, as to
    what files they are sharing. I can tell you that it is not true
    that they do not get a priority. So I do know that. The
    priority is for uploads and not files that are downloaded.
        Mr. Waxman. What does that mean?
        Mr. Schiller. The priority is for an upload. So for upload
    speeds; that your files will have essentially a greater path.
    But I am not too certain on this.
        Mr. Waxman. Does that mean you get a better quality?
        Mr. Schiller. You get a better quality of download; a
    better quality of transfer, perhaps. I do not know the
    specifics.
        Mr. Waxman. Is it not an incentive then, to open up your
    files to get the better quality?
        Mr. Schiller. No, I do not think so. I think the initiative
    that Sharman and Altnet have always gone by, and this is why
    Altnet has licensed files, we have an application that is
    coming out in the next few weeks that will give people points
    that they can exchange for cash and prizes for sharing
    legitimate files.
        So we are trying to curb the user behavior. Essentially, we
    are trying to encourage them to not share illegitimate or
    illegal or illicit files, because they will not have any
    benefit for doing so. We disclose that right at the beginning.
    So essentially, you will see on the front page, it says, for
    downloading or uploading gold files, you get points for and you
    benefit for that.
        So that is really important. We were talking about user
    behavior or education of the end user, educating them that
    there is zero benefit to transferring or sharing illegal files;
    and there is all the benefit in the world for transferring
    legitimate files. So that is the message that we put forth.
        To address some of the issues that we heard here recently,
    I think that I can tell you that the future versions of KaZaA
    Media Desktop, it is not public information. I cannot give
    specifics about what changes have been made. But I can tell you
    that all the issues that we have just heard with regards to a
    user mistakenly sharing a folder or sharing an entire directory
    have been addressed.
        Mr. Waxman. My time is up, and we will have another round,
    I am sure. But I just want to ask you a yes or no question. A
    user maximizes the number of uploads by sharing the most files.
    Is that not a correct statement?
        Mr. Broes. In participation, yes.
        Mr. Waxman. And it does not distinguish which files?
        Mr. Broes. No, that is purely up to the user. The user
    makes the decision on what files he wants to share.
        Mr. Waxman. Well, I am going to question that in the next
    round.
        Mr. Broes. Sure.
        Mr. Good. Mr. Chairman, my-author would like to speak,
    also. Could we swear him in right now?
        [Witness sworn.]
        Chairman Tom Davis. Thank you, please state your name for
    the record.
        Mr. Krekelberg. I am Aaron Krekelberg. To address your
    question, there is nothing that prevents a teenager from
    sharing their father's files or their parents' files. If the
    parent were to use that computer, they would not know that that
    teenager had allowed the sharing of those files.
        Mr. Waxman. And is there an incentive to share more fields,
    in order to get better uploads?
        Mr. Krekelberg. There seems to be a new performance level
    that they are adding. There seems to be an incentive to share
    more files.
        Mr. Davidson. There is a simple answer, which is, in some
    of these systems, yes, that is absolutely true.
        Mr. Broes. Let me just also re-define something. It is not
    how many files you are sharing. It is how many files are
    uploaded.
        So the user is incentivized to not share thousands of
    files. They are incentivized to share files that people would
    like and legitimate files. So by putting 10,000 files in your
    shared folder, that is not going to help your status.
        Mr. Waxman. Well, some people who are interested in
    identity theft or delving into the privacy of others may want
    those files. I assume what you are saying is that most people
    who go to peer-to-peer file-sharing are more interested in
    music, and that is more popular.
        But we are opening up a whole new area for a greater
    popularity to get private information about people what that is
    available to someone who takes advantage of the opportunity.
        Mr. Broes. Well, from my previous experience in analyzing
    these networks and for precisely what we are discussing here,
    sharing private information, we saw a rapid decline over the
    years as people understood how a file-sharing network actually
    works.
        So at the beginning, when it was just a Gnutella-based,
    initially right after they shut down Napster, we saw this major
    flood of literally tens of millions of people going to
    Gnutella.
        Of course, they did not understand just how that
    decentralized network functioned. So we saw a tremendous amount
    of personal files being shared. But as we continued to monitor,
    and as we continued to educate, we saw less and less. So today,
    I actually find far less private files than initially.
        Mr. Waxman. Is that a statement that others would agree
    with?
        Mr. Good. Well, it is a difficult question to answer,
    Because the KaZaA Network is encrypted. So it is difficult to
    really tell to what extent the network you are searching in, at
    any given time; or how much access to the network a given
    client has.
        We ran our study initially in June of last year. Over a 12
    hour period, we were able to find about 150 users who were
    sharing their inboxes, unique users.
        We ran a similar study in January, and we ran it for a
    longer period of time, over a week, and we were able to find
    about 1,000 users who were sharing their in-boxes.
        It is difficult for us to say whether this is an increase
    or a decrease, because of the encryption, and we're not allowed
    to reverse engineer it, so we cannot figure out what is going
    on. But it definitely seems like it is a problem today.
        Mr. Waxman. Thank you; I have further questions, but I know
    my colleague, Mr. Shays, wants to ask some.
        Mr. Shays. My daughter would advise me not to be here, so I
    would not expose my unbelievable ignorance.
        Secretary McNamara, many years ago, always thought there
    was a solution to every problem. He acknowledged about 10 years
    ago that he realizes there are some problems without solutions.
        As I am listening to this dialog, I am obviously hearing
    the issue of identity. I am hearing somewhat the issue of
    virus. I know this is not a hearing about copyright. So we are
    not going to deal with that issue.
        But I am interested to know, are there solutions to the
    issue of privacy, particularly; and if so, are they regulatory,
    legislative, what are they? Maybe you could just kind of go
    down the line here.
        Mr. Good. Certainly, well, our view is twofold. As I said
    in the opening statement, we think it is very important to
    educate people. We live in a world now where people can be
    connected to the Internet 24 hours a day.
        We are going to be living in a world shortly where the
    Internet is going to be on your cell phone, and location
    information and this sort of information is going to be
    available to people, also.
        So it is very important for people to understand what it
    means to be connected to the network, and what sort of
    information that they could be potentially sharing.
        The second and probably the more important thing,
    especially since I am a researcher in human/computer
    interaction, we like to think that we can design things so that
    we are not compromising security and convenience. We want
    security and convenience to live together, so that things are
    convenient, but they are also very secure.
        Mr. Shays. Do you think that is possible?
        Mr. Good. I think, to a certain extent, it is. I think
    having very smart defaults, having defaults that really protect
    the user; and we are starting to see that in the world, as
    Microsoft now is really trying to push out. So out of the box,
    things are safest.
        This has not always been the case. It has always been the
    case that when things come out the box, they are pretty much
    open to anything. This makes the world pretty insecure. But
    nowadays, we are really seeing a push for having very strong
    default settings that really make sure that things are secure
    for people.
        I think that there is more we can do in that area. It is a
    difficult problem. Because as we start getting into more
    complex ways to manage privacy, it becomes increasingly
    difficult. But I like to see those two approaches really taken
    seriously.
        Mr. Shays. Well, one is education and the other is design,
    correct?
        Mr. Good. That is correct.
        Mr. Shays. Is there anything else?
        Mr. Good. No, I think that is it.
        Mr. Shays. Anyone else?
        Mr. Schiller. I would say that it is great to say that we
    need to educate people. But, you know, I drive my car every
    day, and actually, I do know how internal combustion engines
    work. But in some sense, that should not be a requirement in
    order to drive a car. So I would say the emphasis has to be on
    the design of the technology.
        My experience is, we see a pendulum that swings. The
    technology comes out. People tradeoff security to get more
    convenience. We have hearings like this. People hear about
    identity theft. They become concerned about the technology. The
    technologists then react to that and put in better technology,
    better design, better controls.
        I am going to talk a little bit off the top of my head
    here. I said before that it asks which directories of files you
    wanted to share. You could easily, for example, say, if we are
    going to look for music, then let us only share files that end
    in .MP3, and let us not share files named ``In-box.''
        But, you know, the funny thing is, if I am the guy
    designing this, and let us all know that there is a copyright
    issue here, that the designers of this are safer sharing
    everything than they are trying to just share a particular type
    of file. Because then it makes it easier to accuse them of, oh,
    gee, this is really only about sharing music.
        One of the defenses people like to use is, oh, know, you
    can share anything. So that, I think, drives the tradeoff in
    the wrong direction. But certainly, I do believe it is possible
    to design this stuff in a way that is, in fact, reasonably
    secure.
        Mr. Shays. You know, it is funny, as you all are
    testifying, there is always someone in the audience that is
    shaking their head or nodding their head. I feel like I am in a
    Baptist church without any sound. [Laughter.]
        Dr. Hale.
        Mr. Hale. Yes, I think I would agree that education is a
    huge component. I would also concur that our design issues, I
    would say, is what is designed out of the software, as opposed
    to what is added to it, that could really help matters.
        The security circumvention tactics that are used by the
    software really make it difficult for a corporation or an
    academic institution like the University of Tulsa, for
    instance, to protect its user population from these abuses, if
    they are even real or imagined. So that is what I would
    consider to be addition by subtraction.
        Mr. Shays. Given the number of participants in this
    hearing, Mr. Chairman, do you mind if I just complete this
    question with the rest of the witnesses?
        Chairman Tom Davis. That is fine.
        Mr. Shays. Thank you.
        Mr. Davidson. The Federal Trade Commission actually just
    had a workshop yesterday on this very question. It is great
    question about the broader issue of privacy here. I think there
    are three things besides education that we would talk about.
        One is technology or design. The fact is that there are a
    lot of tools out that can help consumers. We have talked about
    some of them: encryption, firewalls, which is something that we
    did not talk about today. With personal firewalls, you can give
    consumers more control about how their computer is
    communicating with.
        This broader design question is building programs and
    systems in a way that are more privacy friendly. A second is
    best practices on the part of industry. I think there is strong
    message that needs to be sent and continues to be sent that
    companies need to act responsibly when they collect
    information, and many of them do.
        But there are real issues about best practices for how
    people use information that they collect. That is a very
    powerful possible tool; industry standards, best practices.
        The third, and I think it is important, is there is a
    growing realization that there may be a need for baseline,
    narrowly tailored legislation about Internet privacy, to deal
    with bad actors in this setting.
        There are some basic components of fair information
    practices like notice about what information is being
    collected, meaningful choices for consumers about whether their
    information is being collected, access to the information that
    has been collected.
        I think there is a growing awareness that we may need
    something like that, more broadly. I have not emphasized that.
    We are a supporter of that. I did not emphasize that in my
    testimony because I think the main issue here of people
    mistakenly sharing files is not something that you are likely
    to solve by legislation.
        But, for example, the spyware issue that has come up is
    something, if not remedied through best practices, that might
    need to be something that is part of a legislative action.
        Mr. Waxman. Would the gentleman yield?
        Mr. Shays. Absolutely.
        Mr. Waxman. It seems to me what you are saying is that
    technologically, they can develop a design so that private
    information is reasonably secure.
        But is there not a financial incentive for them to try to
    subvert it, because of spyware and adware, or systems that will
    allow people to come in and get information, so that they can
    sell it to others; or get advertisers to know what you might be
    interested in, so they can direct advertisements directly to
    you?
        Are those two financial incentives, so that you try to
    subvert it, either through port hopping or tunneling or
    whatever other way they can design it?
        Mr. Davidson. Well, I would just answer by saying I think
    that is absolutely true. We are concerned that obviously the
    reason that people are doing some of these things is because
    there are financial incentives.
        Our belief is actually in the long run, a lot of people
    will realize that the best financial incentive is having
    customers who trust your stuff. People, if they know about what
    is going on, will not buy or use products that violate their
    privacy, if they have options.
        So there is a hope that the market will develop and that
    people will, when they learn about these things, not use the
    file-sharing product that invades their privacy and has a lot
    of spyware. But hopefully, the more responsible actors will
    come on the scene.
        Now maybe the answer is that if that does not work, then
    maybe we do need some kind of baseline legislation.
        Mr. Waxman. If the gentleman would permit, what you have is
    a lot of kids who want music for nothing.
        Mr. Davidson. Right.
        Mr. Waxman. So they want music for nothing, even though we
    should give some idea to people that when you take something
    that is not yours and you are not paying for it, it is a form
    of stealing.
        So you have got kids who want something for nothing. They
    are not going to be informed users and worried about privacy.
    So they are just setting the family up for those who want to
    take advantage of the situation, to design ways to subvert any
    attempt to protect their privacy. Maybe some of the technical
    people can tell us about this. But is that not what we are
    facing, Mr. Schiller?
        Mr. Schiller. Well, there are actually two different issues
    here. There is the accidental subversion of privacy by
    accidently sharing files you do not wish. That really has
    nothing to do with the adware and spyware. I would expect to
    see those issues being addressed, because they do not help
    anyone except criminals.
        But the adware and spyware issue is certainly an issue
    where there is an incentive to gather that information. Of
    course, the companies who gather it want only to give it to
    themselves and not to the whole world.
        I think the issue of multiple people using the same
    computer is really an issue of the design of the computer
    system. The Windows platform was never really designed to be a
    time shared, multi-user system. Windows 2000 and XP start to
    add that stuff, but I do not think they have added in the way
    that most people know how to use.
        But frankly, I have a 20 month old son. When he gets older,
    he is going to have his own computer. Because I know not to
    have him get onto mine.
        So I think it is a separate issue about the fact that these
    programs reveal stuff. The fact that it reveals stuff for other
    users of the computer is just a happenstance.
        Chairman Tom Davis. Thank you, the gentleman's time has
    expired; the gentleman from Tennessee?
        Mr. Duncan. Mr. Chairman, thank you very much, and thank
    you for calling this hearing. I think these are very important
    subjects that the panel members are discussing, and I
    appreciate your doing this.
        I usually avoid discussing personal or family type things
    at hearings. But I heard Ms. Frank briefly mention identity
    theft.
        My wife and I have four children. But the older of my two
    sons, who is a senior at the University of Tennessee, just
    yesterday received a notice that they want him to come to
    Juvenile Court to testify in a case involving apparently a 17-
    year-old young man who was using my son's identity and that of
    others to apply for credit cards and I do not know what else. I
    do not know all the details, yet. But he found out just
    yesterday that he was a victim of identity theft. So I guess I
    find that kind of interesting.
        What should a person do who has found out that he or she is
    a victim of identity theft; and how wide-spread is this
    problem? I have had to be in and out with some constituents.
        Ms. Frank. Right; my written testimony is about 20 pages,
    and I talk about that quite a bit. But basically, the first
    thing you do, if you find out that you are a victim of
    financial identity theft, with somebody applying for credit
    cards and credit lines in your name, the first thing you are
    going to need to do is to put a fraud alert on all of your
    credit profiles with the three major credit reporting agencies;
    get those credit reports; and find out what fraud is on there.
        There is just a whole list of things to do. Once you find
    all that and go to law enforcement and make a police report,
    then you go through the whole process of trying to clean it up
    and stop it. So that gets into a whole lot of things.
        But I have this little kit that I am going to give to the
    committee, and I will be happy to speak with you afterwards, if
    you would like.
        Mr. Duncan. Well, is this problem growing quite a bit?
        Ms. Frank. Yes, it is growing tremendously. After the
    Gramm-Leach-Briley Act passed, it has actually gotten a lot
    worse, when that was our financial privacy act.
        What we are finding, and let me give you some statistics,
    at least. I have the statistics in my written testimony. But
    the Federal Trade Commission shows that it has grown
    tremendously in terms of the complaints that they have gotten.
        But a lot of people who are victims of identity theft have
    no idea to go to the Federal Trade Commission. So since they go
    the credit reporting agencies, those are better statistics.
        Transunion, one of the three major credit reporting
    agencies reported in the year 2000 that they got 85,000 calls a
    month to their hotline. In the year 2001, they got 3,500 calls
    a day to their fraud hotline, and they did not give us their
    most recent figures.
        The GAO report that came out last year also talked about
    the tremendous increase in identity theft, because our personal
    information is everywhere, and that is the key to identity
    theft, to use the Social Security number.
        Right now, there are several bills pending in Congress,
    including Diane Feinstein's Identity Theft Prevention Act of
    2003, with some things.
        But there is a real need, which I had brought up in my
    testimony, for us to have some accountability as to how the
    financial industry is issuing credit without verification and
    authentication of persons. So that is what is happening.
        Mr. Duncan. Well, I will look over that. My time is so
    short, let me go in another direction. You know, I chaired the
    Aviation Subcommittee for 6 years. I heard our colleague, John
    Linder, say at an aviation conference in January that the
    Federal Government always seems to overreact to any problem.
        We seem to have pretty much done that in regard to
    aviation. They say TSA now stands for thousands standing around
    and so forth. [Laughter.]
        So I think we have done a more than adequate job, let us
    say, in regard to aviation. But I think that one of our most
    vulnerable areas must be financial cyber-terrorism.
        Do any of you have concerns about that? Do you think that
    is a potential problem? I read that it possibly is. There are
    so many people on this panel, I do not know who is the most
    appropriate person to comment on this.
        Mr. Farnan. Well, sir, I would like to make a comment about
    that. From the FBI's perspective, the answer is a resounding
    yes. We are very concerned about cyber-terrorism and how
    terrorists and others can exploit technology, which is designed
    to be very beneficial and can really advance all of our causes
    in many ways. However, that can also be abused and it can be
    used against us.
        So we have an entire unit at the FBI that focuses on that
    particular issue, to try and stay current with technology, to
    make sure that we know what is going on out there with the goal
    of preventing any kind of cyber-terrorist activity.
        Mr. Duncan. I have read here on the front page of the
    Washington Post that a 12 year old computer hacker opened the
    floodgates at the Hoover Dam. What some people are concerned
    about are our financial markets; yes?
        Mr. Broes. That is a very big concern, and it should be a
    major concern of any company that distributes software that has
    the potential of being hijacked, so to speak; you know, 100,000
    computers, hijacked to attack something specifically.
        For instance, recently, Microsoft has talked about some
    vulnerabilities that were in Passport and instant messenger
    programs. If you can acquire those computers, certainly you can
    cause a tremendous amount of damage. That is why companies have
    to take a genuine responsible approach to this and understand
    that they have a huge responsibility in adhering to even
    voluntary standards and practices.
        So I think absolutely that companies need to do that. I do
    not know whether that is legislation. I would say that
    companies should voluntarily adopt standards and practices,
    just for the sake of their security.
        Mr. Duncan. Let me just say that I think that is a possible
    area of great concern for many of us. Do I have time to ask one
    more.
        Mr. Shays [assuming Chair]. Let us do this, we will let Mr.
    Waxman go, and then we will come back to you.
        Mr. Duncan. That is fine.
        Mr. Shays. Mr. Waxman, you have the floor.
        Mr. Waxman. Thank you very much, Mr. Chairman.
        If there were going to be voluntary standards and industry-
    wide standards, how would that get done? Does anybody have any
    ideas? You have different people competing with each other.
        Mr. Broes. Well, I think that companies have recently
    started to adopt those voluntary standards. You know, Microsoft
    has taken an unprecedented approach by saying, you know, it is
    secure by default, secure by design, secure by deployment. They
    stopped programming for a period of time to go back and look at
    these issues.
        So I think that any time you have the leaders in industries
    taking those initiatives, you are going to find that people
    will follow, because that is the path of success.
        Mr. Waxman. That is Microsoft. How about KaZaA; do they
    have responsibility?
        Mr. Broes. Absolutely; I believe that anyone that has the
    ability or the potential to have their computers hijacked, for
    any reason whatsoever, via their software, they have a
    tremendous responsibility to adopt standards and practices of
    their own.
        I believe that if there was legislation that was enacted
    today, they would have already complied with much of that, if
    not all.
        Mr. Waxman. Along those lines, according to media reports,
    Altnet had planned to launch a program with KaZaA to take
    advantage of unused computing power of computers connected to
    the network. Initial reports indicated this might be done
    without the knowledge of users.
        You have now testified that such a program is still in the
    works, but will be defined by the highest principles of
    disclosure and consent. What are those principles? Will users
    have the same access to peer-to-peer networks, if they do not
    consent to turning over their unused computing power? Unused
    computing power means their computing power becomes a zombie
    for someone else, instead having to furnish it themselves.
        Mr. Broes. Users will always have the consent. It will
    never be a default, where it uses any resource. Altnet has been
    very, very careful in its design.
        In fact, it can be uninstalled. With the future release of
    Altnet, you can uninstall the application that would share
    those resources. We give very, very deliberate instructions on
    how you can do that.
        At the very beginning, when the application is installed,
    it says, would you like to share hard drive space in exchange
    for points, and those points can be redeemed for cash and
    prizes. That hard drive space and how the design has been built
    is extremely encrypted.
        We have gone through all of the security measures and have
    adhered to the security standards that Microsoft and every
    other major software company has adjured to, to develop such an
    application.
        Mr. Waxman. Could users be penalized for not consenting?
        Mr. Broes. Not at all.
        Mr. Waxman. What do others on this panel think about this
    business of how informed the consumer consent is going to be;
    how much lack of information there is before these consents are
    given for file-sharing; Mr. Hale?
        Mr. Hale. If I may say, I think consent is there; informed
    consent, I do not know about. I recently read, not KaZaA's, but
    a competing client's peer-to-peer privacy policy, which I was
    happily surprised to find that they had.
        But quite honestly, it would have been easier to try to
    decipher my own telephone bill. Maybe that is a topic for
    another hearing.
        But I think in a lot of the click through agreements which,
    by the way, is not just a peer-to-peer problem, and it is a
    problem with the software industry; a lot of the click through
    agreements are fairly easy to click through without having to
    read what you are agreeing to.
        So to sum up, I would say the consent is there. Whether the
    users are aware of what they are consenting to is an entirely
    different matter. This has to do with transparency, in my
    opinion, and clarity.
        Mr. Davidson. I think you are really on to something,
    because we often talk about meaningful choice and meaningful
    notice. There is, in fact, if you look at a lot of these end
    user license agreements, it says in there that this software is
    being installed and it will do these things, but how many
    people actually take a look at them?
        I could bring you examples of these long agreements, these
    long privacy agreements. The average consumer is not getting a
    chance to look at it. So I think we are hopeful, on some level,
    that people will start to figure this out. I do not want to
    sugar coat it, though. We think that is a baseline that needs
    to be met, and it is going to be tough.
        Mr. Waxman. Mr. Davidson, let me interrupt you, because I
    see my yellow light is on. I wanted to ask you one more
    question, and I am afraid I will not get a chance to do it.
        Why should people who are going on file-sharing programs
    and downloading copyrighted music or movies not have the fact
    that they are doing that provided to the copyright holders? If
    they are consenting to let their files be searched, because
    they want something for nothing, why should the copyright
    holders not have the access to the information that they are
    doing it?
        Mr. Davidson. Right; are you thinking particularly about
    the subpoena issue that I mentioned in my testimony?
        Mr. Waxman. Yes.
        Mr. Davidson. I think that is a very good question. I do
    not think that the issue is that people who are, for example,
    breaking the law should not ultimately be identified and
    revealed. The question is, how do we do that? We have to make
    this balance about legitimate people getting access to personal
    information all the time, in law enforcement contacts and other
    kinds of privacy contacts.
        I think the issue here is that we have a situation where it
    is not just legitimate uses. In this particular provision of
    law, it is any copyright holder, and I hazard to guess that
    most of the people in this room are copyright holders, they can
    go to a court clerk, make an allegation, and reveal somebody's
    identity.
        Using one of these networks or using the Internet does not
    necessarily reveal your identity. For some people, some of the
    activities they do online, they do without revealing their
    identity, and that is extremely important.
        So our feeling is that if identity is going to be revealed,
    it should be done with some measure of due process, and
    particularly, people should know that their identity has been
    revealed.
        That is, I think, the flaw here. It is not to say that we
    cannot find a way to work this out, so legitimate enforcement
    of the law can happen. It is about the fact that there are
    actually in this particular provision, very few protections,
    and that has been our concern.
        Ms. Frank. Let me just add to that, because in California,
    we have a bill pending right now in our California legislature.
    If there is going to be a subpoena to find out who somebody is
    online, that there has to be notice, and that the ISP has to
    give notice to the user ahead of time, so that they can get a
    protective order or take some measure with this notice to
    protect themselves.
        We worry about things like stalking; that someone will say,
    oh, I am a copyright holder, and I need to know who this person
    is in that chat room, and it is really a stalker and ex-
    husband. I literally note these kinds of things that happen.
        So this is at least to give that person a chance, a 15 day
    notice, or a 30 day notice, or whatever it is, so that they get
    a chance to go in and say, look, I do not want to reveal my
    identity. This person really is my ex-spouse, who is trying to
    kill me. So that was the idea of due process, if I understand
    what Alan is talking about.
        Mr. Davidson. I cannot say it better than that.
        Mr. Shays. Mr. Duncan.
        Mr. Duncan. Let me go in a little different direction. I
    think when we come into a job like those of us who are Members
    have, I think we basically sort of tacitly agree to give up our
    privacy. That really does not concern me, but it does seem a
    shame to me that there is almost no privacy for private
    citizens now, it seems to me.
        Yet, we seem to have a large segment of the population now,
    especially young people, who have become almost addicted to the
    computers, and have almost a worship of the computers. So if
    anybody asks any questions that are somewhat critical, they
    almost get offended, and I hope that none of you will get
    offended.
        But it seems to me that, as I say, we have just about done
    away with privacy. In some ways, maybe it has resulted in good
    things. What I have in mind, I am thinking about the Dean of
    the Harvard Divinity School got caught for, I think it was,
    child pornography or something, and we see that all the time.
        I do not see how anybody can feel that there is anything
    secret anymore or anything private that they put into a
    computer.
        I heard on the CBS national news, 2 or 3 years ago on the
    radio 1 day as I was driving along, that computer hackers had
    gotten into the top secret files at the Pentagon, I think it
    was 250,000 times in the year before. I mean, it is just mind
    boggling.
        It seems that if somebody comes up with a system or a
    program to develop some privacy for things that people put into
    their computers, that somebody very shortly comes up with
    something that breaks that program, or gets into it, or wipes
    out the privacy. What do you all say about that? Do you have
    any concerns?
        Ms. Frank. Well, I would just like to say that it is not
    just computers. It is not just our computers. I wanted to
    respond to the questions before about consumer education. We do
    this all the time with identity theft. But the truth is, they
    are so much beyond our control.
        For example, yes, we can be educated and say to people, OK,
    be careful when you are online or when you are in the chat
    rooms, or when you are sharing information, or when you are
    doing e-mail. But the truth is that you can tell people that,
    but there is so much to know.
        I really work at this, but I have a whole other field. I am
    sure all of you have so many bills that you have to read. I do
    not know how much of a computer expert you all are.
        But I sit on the high tech crime unit of Orange County
    Sheriff Reserves, and I am the only ``non-techy'' on there. I
    have enough information to know that I should be worried. But
    it is too much of a burden on consumers to ask them to know all
    this stuff.
        So if KaZaA is going to have information and they are going
    to have software programs that you are going to use, they
    should definitely give you big pop-ups in very simple language
    saying, if you push this button, your whole ``C'' drive is
    going to be open. That means that everybody can get into your
    Quicken or your Quickbooks or your IRS or your resume or
    whatever it is, and it has to be simple.
        Mr. Duncan. Well, it is like you said awhile ago, people
    can now find out almost everything about anybody that they want
    to find out about: bank records, house records, and everything
    else.
        Ms. Frank. Right.
        Mr. Duncan. It amazes me that just from what I read in the
    newspapers that anybody thinks that anything they do on a
    computer today is really private; any Web site they visit, any
    e-mail they send; yes?
        Mr. Broes. Security today has changed. We can no longer put
    a lock on something and assume that it is going to hold. I
    think the military has learned this, that it is an evolving
    process, and it is dynamic.
        So we are continuing this. It is just like virus
    applications. They are continually chasing viruses. They are
    continually updating their data base, and they are continually
    educating their users as to what is out there and what the
    threats are, and trying to make them feel more secure about it.
        I think that is the process that we are going to see take
    place in most applications. Certainly, as I said, there are
    leaders that have taken initiatives from Microsoft, all the way
    to Altnet and Sherman Networks. They have taken those
    initiatives to say, we understand there is this issue and we
    are dealing with that problem.
        I do not foresee that changing anytime soon. This is a
    dynamic situation. The Internet, by nature, is dynamic, and we
    have to be dynamic in our approach to security and privacy.
        Mr. Davidson. I would just add that I think that this is
    the tip of the iceburg, unfortunately. There are even more
    interesting and sort of more invasive new technologies. We
    talked about location information; people building ID tags into
    products that people can scan and find out what you have, what
    you are wearing, what you are carrying in your handbag.
        We are talking about networks of imbedded computers,
    intelligent buildings, and intelligent rooms, that are going to
    collect all sorts of information about people. It is going to
    be increasingly harder for people to avoid all of these things.
        So the simple answer of hey, if you put it on the computer,
    you should know someone else is going to get it, is going to
    become, for a lot of people, not a realistic alternative.
        If you use your cell phone, location information may be
    captured. If you go through a toll booth, and your electronic
    tag records that you have been there.
        But even more importantly, I would say the computer is not
    something we can avoid in life, so we need to figure out how to
    address these things.
        Mr. Duncan. Are you saying that Big Brother is already here
    and there is nothing we can do about it?
        Mr. Davidson. I think, there is nothing we can do about it
    is not right. I think that we need to do something about it,
    and we are trying to find ways to do something about it, but we
    need to keep working on it because we are not there yet.
        Mr. Duncan. I see some of the panel members laughing.
        Mr. Schiller. It is not Big Brother. There are lots of
    Little Brothers.
        Mr. Duncan. Lots of Little Brothers?
        Ms. Frank. Well, if you want my suggestion as to what I
    would like to have Congress do, I would like to have them set
    up a privacy commission. We are the only civilized country in
    the world that does not have a privacy commission.
        If you look at Canada right above us, if you look at all
    the European nations, we do not have a privacy commission. We
    have had little privacy czars, but we do not have a privacy
    commission to look at all these issues.
        Privacy in the millennium is not about the right to be left
    alone. It is the right to control your personal information. I
    think it is pretty frightening, when we are going on our
    computer and we do not know about spy-ware. We do not even know
    where it is. It is hidden somewhere, and we cannot even find
    it. That is terrifying.
        So the result of that is identity theft. All this
    information that is being taken about us can be used in very
    insidious ways. So we do need to have the fair information
    practices that Alan was talking about: the notice, the choice,
    the security, all those things.
        The only way to do it is to really have a real privacy
    commission that is looking over this whole issue. Because it is
    the scariest issue, I think, of what we are in, in our society
    right now.
        Mr. Duncan. Well, I would agree with the commission, but I
    am a little skeptical. I think we are almost too far gone,
    really, now.
        Ms. Frank. It is out there, but access is the difference;
    in other words, what access and what way to control. For
    example, you mentioned your family.
        Mr. Duncan. It was my son.
        Ms. Frank. So the scary thing for him is, he does not know
    what else has happened. He does not know if he has a criminal
    record.
        So for him to be able to get access to those records and
    correct them, if you say, well, my information is out there and
    it is too late; well, what happens when you cannot get on an
    airplane because the red light comes on and it has nothing to
    do with you. Your name is mixed up with somebody else's; or
    your son, who is mixed up with some other person who has been
    stealing his identity and committing crimes in California and
    Virginia.
        Mr. Duncan. Well, the one interesting thing that I did not
    mention, the young man that they have accused of doing this has
    a foreign sounding name, that I cannot even really pronounce.
        Ms. Frank. Remember, over half of the terrorists committed
    identity theft.
        Mr. Duncan. All right, thank you very much; thank you, Mr.
    Chairman.
        Mr. Shays. Ms. Frank.
        Ms. Frank. Yes.
        Mr. Shays. You basically were kind of dealing with the
    solution, the education versus the design. It is kind of like
    your big warning system that flairs up there.
        Ms. Frank. The fact that the education is right when you
    are using the product, I think, would be helpful.
        Mr. Shays. Before my time had run out, I think I was with
    you, Mr. Broes. I do not need to spend a lot of time on this. I
    just want to know, just simply, the education design, that Mr.
    Davidson had added some other points, is there anything that
    you would add to the solutions to the privacy issue, the virus
    issue?
        Mr. Broes. Sure, well, I think it is in our best interests,
    and any company's best interest, to design their software to be
    as private and as secure as possible. So I think that, as I
    said, there is a tremendous amount of responsibility, I
    believe, with any company that has applications that are
    distributed to millions of people around the world.
        So secure, private, by design, I think is definitely the
    way to go, and these are voluntary standards. These are
    standards that every major corporation today that wants to
    compete is going to have to take, because people just do not
    want applications on their computers that are not secure and do
    not provide privacy.
        So I think it is going to be natural selection; that
    companies who are willing to play in the spy war game and not
    notify people, I think that they are ultimately going to be
    uninstalled and deleted, and people are going to remove them.
        So voluntary standards and practices, I think, are
    critical. As I said earlier, if it were legislated today, I
    think that we would have already taken those initiatives.
        Mr. Shays. I was struck by the fact that Big Brother is
    dead and Little Brothers are in. It is almost like we need a
    Big Brother, though, to deal with Little Brothers; Mr. Farnan.
        Mr. Farnan. There are definitely privacy issues involved in
    what we were talking about today. I think that one of the
    reminders that we have to give ourselves is that even though we
    are in an electronic age, a lot of the fundamental rules of
    life still apply. Things like ``buyer beware'' still apply.
        Just because people are involved in dealing in cyberspace
    and conducting transactions in a computerized environment does
    not automatically mean that there are no privacy issues, or
    that it is somehow inherently safer; because as we are seeing
    today, it is not.
        Second, to follow the analogy of the automobile that was
    raised a little bit earlier, what is scarey is that sometimes
    we can have fairly young people, and if they are interested in
    learning how to drive a car and we put them in a Ferrari, that
    might be a scarey thing, as opposed to a four cylinder car in a
    safer environment.
        So to reiterate, the theme of education and consumer
    informness is crucial to this whole area, as are parental
    controls. Because as we have also heard, children who have
    access to their parents' computers may be pushing buttons that
    result in a lot of information leaving that household that was
    never intended to leave that household.
        Mr. Shays. I just have one other quick question. I do not
    need all of you to respond, just one or two. Are we teaching
    this in school? Are we educating our kids about this?
        Mr. Hale. I can speak to this, somewhat. I would say that
    nationwide, we are beginning to. We are only beginning to. But
    it is amazing the views that even some of my own students have
    about piracy and their privacy, and what they are willing to
    give up to get the latest recording.
        We work at the University of Tulsa with a number of
    schools: high schools, elementary schools, middle schools. I
    just was at a high school last week, where I spent almost the
    entire time talking about peer-to-peer technology and privacy
    issues, and media piracy, as well.
        So we are beginning to, but I think that not enough of us
    are doing it, just yet. I think that is the key. Because once
    you get critical mass, then you can start to see results.
        I would like to agree with what Mr. Broes said about the
    natural selection piece of this. I think once consumers and our
    children are educated, then they will begin to value privacy
    more. Then the economics pendulum will begin to swing in the
    favor of the companies that are performing due diligence in the
    privacy area of their software. But until that happens, the
    natural selection is going to favor those companies.
        Mr. Shays. I have just a slight observation. I am struck by
    this hearing as to one, I would not want to be a professor
    teaching young people about technology, considering they
    probably know more than you do, and you always fear that they
    might.
        But the other observation I make is, I am struck by the
    fact that young people gain these incredible skills to do bad
    things without necessarily knowing the ethnics behind what they
    are doing, which is kind of an interesting dilemma.
        Mr. Chairman, thank you so much for the hearing, and I
    thank our witnesses.
        Chairman Tom Davis. Let me thank all the witnesses, as
    well, for appearing today, and I thank the staff for working on
    this from both sides. We heard some very useful information
    today, that should concern any person who uses file-sharing
    programs or has them installed in their computers. Obviously, I
    think peer-to-peer users have to be aware of the files they are
    making available for sharing.
        We are going to follow this up with another hearing in the
    near future, looking at file-sharing in Government agencies.
    Again, I thank the witnesses. This is very, very important, as
    we proceed to understand this better and move forward to
    whatever we might do.
        Thank you very much; the hearing is adjourned.
        [Whereupon, at 11:55 a.m., the committee was adjourned, to
    reconvene at the call of the Chair.]
        [Additional information submitted for the hearing record
    follows:]

    [GRAPHIC] [TIFF OMITTED] T8016.080

    [GRAPHIC] [TIFF OMITTED] T8016.081

    [GRAPHIC] [TIFF OMITTED] T8016.082

    [GRAPHIC] [TIFF OMITTED] T8016.083

    [GRAPHIC] [TIFF OMITTED] T8016.084

    [GRAPHIC] [TIFF OMITTED] T8016.085

    [GRAPHIC] [TIFF OMITTED] T8016.086

    [GRAPHIC] [TIFF OMITTED] T8016.087

    [GRAPHIC] [TIFF OMITTED] T8016.088

    [GRAPHIC] [TIFF OMITTED] T8016.089

    [GRAPHIC] [TIFF OMITTED] T8016.090

    [GRAPHIC] [TIFF OMITTED] T8016.091

    [GRAPHIC] [TIFF OMITTED] T8016.092

    [GRAPHIC] [TIFF OMITTED] T8016.093