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[House Prints 109-F]
[From the U.S. Government Publishing Office]

109th Congress                                               Committee
                            COMMITTEE PRINT                   
 2d Session                                                 Print 109-F
_______________________________________________________________________

                                     

 
           SEXUAL EXPLOITATION OF CHILDREN OVER THE INTERNET

                               __________

                             A STAFF REPORT

                      PREPARED FOR THE USE OF THE

                    COMMITTEE ON ENERGY AND COMMERCE

                     U.S. HOUSE OF REPRESENTATIVES

                             109TH CONGRESS

[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

                              January 2007
                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida             Ranking Member
  Vice Chairman                      HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky               SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia             BART GORDON, Tennessee
BARBARA CUBIN, Wyoming               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
HEATHER WILSON, New Mexico           BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
    Mississippi, Vice Chairman       GENE GREEN, Texas
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska                  CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey            JAY INSLEE, Washington
MIKE ROGERS, Michigan                TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho          MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
                      Bud Albright, Staff Director
        David Cavicke, Deputy Staff Director and General Counsel
      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
                                 ------                                

              Subcommittee on Oversight and Investigations

                    ED WHITFIELD, Kentucky, Chairman
CLIFF STEARNS, Florida               BART STUPAK, Michigan
CHARLES W. ``CHIP'' PICKERING,         Ranking Member
    Mississippi                      DIANA DeGETTE, Colorado
CHARLES F. BASS, New Hampshire       JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  JAY INSLEE, Washington
MIKE FERGUSON, New Jersey            TAMMY BALDWIN, Wisconsin
MICHAEL C. BURGESS, Texas            HENRY A. WAXMAN, California
MARSHA BLACKBURN, Tennessee          JOHN D. DINGELL, Michigan,
JOE BARTON, Texas,                     (Ex Officio)
  (Ex Officio)
                         Letter of Transmittal

                     U.S. HOUSE OF REPRESENTATIVES

                    COMMITTEE ON ENERGY AND COMMERCE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                                   January 2, 2007.
    To Members of the Committee on Energy and Commerce:
    We are pleased to forward to you the bipartisan report 
prepared by Committee staff entitled ``Sexual Exploitation of 
Children Over the Internet.'' This report summarizes what was 
learned during a one-year investigation by the Subcommittee on 
Oversight and Investigations.
    During nine days of public hearings, the Subcommittee found 
that the sexual exploitation of children over the Internet has 
reached a crisis point. Current estimates indicate that, at any 
given time, approximately 50,000 child predators are online 
searching for children. Commercial child pornography websites 
are increasing in number and may generate billions of dollars a 
year in revenue. To date, the National Center for Missing and 
Exploited Children's (``NCMEC'') Child Victim Identification 
Program (``CVIP'') has reviewed to date over six million 
individual images related to apparent child pornography.
    Even more disturbing is the fact that the images now being 
found on the Internet are becoming more violent in nature, 
including depictions of rape and torture, and the children 
abused in these images are younger and younger. According to 
NCMEC, more than 80 percent of the images found on the 
computers of those individuals caught with images of child 
sexual abuse include children who are 12 years old or younger. 
Thirty-nine percent of those persons caught with images of 
child sexual abuse possessed images of children younger than 6 
years old and 19 percent of those persons arrested on child 
pornography charges between July 2000 and June 2001 possessed 
images of children younger than 3 years old. While law 
enforcement is making great strides, additional resources must 
be dedicated to combating this problem, including the resources 
of the Internet Service Providers and financial services 
companies, as well as other firms whose systems have been 
exploited by child predators and commercial child pornography 
businesses.
    Already, the Subcommittee's investigation has resulted in 
some important changes in the way the United States government 
and the private sector are combating the sexual exploitation of 
children over the Internet. These changes, which are described 
more fully in the text of the report, include the voluntary 
agreement of some Internet Service Providers to increase their 
data retention policies; the creation of the Technology and 
Financial Services Coalitions at NCMEC; increased cooperation 
internationally among law enforcement agencies; the growing 
consensus that legislation may be necessary to aid law 
enforcement investigations of Internet child pornography; and 
passage in the House of Representatives of a provision that 
places certain network providers at risk if they fail to 
prevent the distribution of child pornography over their 
systems. We expect that this investigation will lead to 
additional reforms aimed at identifying child predators and 
preventing the transmission of child pornography images over 
the Internet.
            Respectfully submitted,
                                    Ed Whitfield, Chairman,
                               Bart Stupak, Ranking Member,
                      Subcommittee on Oversight and Investigations.

                            C O N T E N T S

                              ----------                              
                                                                   Page
I. Key Findings..................................................     1
II. Background...................................................     6
III. The Subcommittee Investigation..............................    13
A. Law Enforcement Efforts to Combat the Sexual Exploitation of 
  Children Over the Internet.....................................    14
B. The Role of Internet Service Providers and Social Networking 
  Websites in Combating the Sexual Exploitation of Children Over 
  the Internet...................................................    19
C. The Role of the Financial Services Industry in Combating the 
  Sexual Exploitation of Children Over the Internet..............    24
D. The Psychology of Pedophiles and Child Predators..............    30
           SEXUAL EXPLOITATION OF CHILDREN OVER THE INTERNET

  Bipartisan Staff Report for the Use of the Committee on Energy and 
                                Commerce

                              January 2007

                            I. KEY FINDINGS

    The Subcommittee on Oversight and Investigations examined 
several different components of the U.S. effort to combat the 
sexual exploitation of children over the Internet. Broadly, 
these entities included: (1) U.S. law enforcement; (2) the 
National Center for Missing and Exploited Children (``NCMEC''); 
(3) Internet Service Providers (``ISPs''); (4) the financial 
services industry; and (5) social networking websites. The 
Subcommittee also reviewed the efforts of several foreign 
governments and industries with respect to the sexual 
exploitation of children over the Internet, including the 
United Kingdom's Home Office, the Internet Watch Foundation 
(``IWF''), the Child Exploitation and Online Protection 
(``CEOP'') Centre, Interpol, the European Union, the Dutch 
National Police Agency and Ministry of Justice, and Europol. 
The Subcommittee's investigation also encompassed examining 
Internet safety educational programs, as well as exploring 
issues related to the psychology of pedophiles and online child 
predators in order to educate parents and children on how 
children can avoid becoming a victim. Key findings from the 
Subcommittee's investigation include:
     Crimes involving the sexual exploitation of 
children over the Internet are a growing problem in the U.S. 
and around the world, due to the ease with which pedophiles and 
child predators can trade, sell, view, and download images of 
child pornography from the Internet.
     The number of sexually exploitative images of 
children over the Internet is increasing, the victims are 
becoming younger, and the substance of the images is growing 
more violent.
     Commercial websites involving the sexual 
exploitation of children over the Internet are a growing and 
lucrative business. Current estimates indicate that on any 
given day there may be more than 100,000 sites with 
commercially available child pornography and that this is 
likely to be a multi-billion-dollar-a-year industry.
     Together with the development of digital 
photography and web cameras (``web cams''), the ability to 
communicate anonymously over the Internet through online 
chatrooms, Instant Messaging services, and social networking 
websites has made it easier for pedophiles and child predators 
to contact children and to ``groom,'' or befriend and seduce, 
them. The Federal Bureau of Investigation (``FBI'') estimates 
that 50,000 child predators are online at any time searching 
for potential victims.
     The U.S. law enforcement effort to combat online 
child pornography involves several different federal agencies, 
with sometimes overlapping jurisdiction in these cases, as well 
as federally funded state law enforcement officers specially 
trained in these cases, referred to as Internet Crimes Against 
Children (``ICAC'') Task Forces. Each of these agencies 
performs vital investigative functions necessary to combat the 
sexual exploitation of children over the Internet. Federal law 
enforcement agencies either need increased funding or better 
prioritization and organization within their agencies, or both, 
specifically to combat child exploitation over the Internet, 
including additional agents dedicated to investigating these 
types of crimes, additional forensic laboratories and 
specialized training for investigating these cases.
     The U.S. Postal Inspection Service (``USPIS''), 
which has a long-standing role in investigating cases involving 
the sexual exploitation of children, does not currently have 
statutory authority to issue administrative subpoenas in child 
exploitation cases, whereas other federal agencies, such as the 
FBI and Immigration and Customs Enforcement (``ICE''), now part 
of the Department of Homeland Security, do have this power. In 
order to further enhance the ability of the USPIS to 
investigate child sexual exploitation crimes, an amendment to 
18 U.S.C. Sec. 3486 should be considered by Congress to include 
authority for the Postmaster General to issue administrative 
subpoenas in criminal investigations involving child 
exploitation.
     While the federal sentencing guidelines for 
criminal offenses relating to the sexual exploitation of 
children involve strict penalties, there is a wide discrepancy 
in state criminal codes both in covering all the substantive 
offenses, as well as, in sentencing. Because approximately 70 
percent of all cases involving the sexual exploitation of 
children over the Internet are prosecuted at the state level, 
state legislatures should consider enhancing the penalties for 
these offenses and, in some instances, passing additional 
criminal laws that address the sexual exploitation of children 
over the Internet.
     Given that the vast majority of prosecutions for 
crimes involving the sexual exploitation of children over the 
Internet take place at the state level, it is vitally important 
that state law enforcement officers are trained in 
investigating these crimes and have access to forensic 
laboratories.
     Additional resources should be assigned on both 
the federal and state level to investigate and prosecute these 
cases. These resources include federal and state law 
enforcement agents and prosecutors, forensic laboratories and 
law enforcement and prosecutorial training.
     The use of anonymizers and other encryption 
methods poses a substantial threat to law enforcement's ability 
to investigate and bring charges against individuals who 
create, trade, or otherwise distribute images of child 
pornography over the Internet. Industry and law enforcement 
need to work together to develop methods that will allow law 
enforcement agents to access data related to child sexual 
exploitation cases while protecting customers' needs to secure 
their private data unrelated to those cases.
     Currently, NCMEC houses a central database of 
known images of child sexual exploitation, which includes 
images found through investigations conducted by U.S. law 
enforcement, such as the FBI, ICE, and USPIS. It is important 
that all U.S. law enforcement agencies at the federal and state 
level have access to this centralized database to consult when 
investigating crimes involving the sexual exploitation of a 
child online.
     ISPs that provide connectivity to the Internet do 
not retain Internet Protocol (``IP'') address data linked to a 
subscriber for the same amount of time. ISPs that provide 
content also have a wide variety of data retention times for IP 
addresses and subscriber information.
     It is critically important to investigations 
involving the online sexual exploitation of children that law 
enforcement agents are able to access IP address data linked to 
a subscriber--particularly that information kept by ISPs that 
provide connectivity to the Internet. Pursuant to 18 U.S.C. 
Sec. 2703(f), once a law enforcement agent sends a data 
preservation request to an ISP, the ISP must retain the data 
described in the request for 90 days, a period which can be 
extended an additional 90 days if law enforcement requests. 
Once a preservation request or subpoena has been issued, ISPs 
should make every effort to respond to law enforcement as 
expeditiously as possible. Without this information, the 
investigation is likely to hit a dead end and a child in danger 
may not be rescued.
     Child pornography investigations often take months 
to develop, during which time critical data, such as IP 
addresses linked to a subscriber's account, may be lost if the 
Internet Service Provider does not have an adequate retention 
policy.
     Law enforcement agents who testified at the 
Subcommittee's April 6, 2006 hearing supported a data retention 
policy of at least one year for IP address information. Due to 
the fact that harm may be occurring to a child in real-time 
during an investigation involving the sexual exploitation of 
children over the Internet, Congress should consider requiring 
ISPs that provide connectivity to the Internet to retain such 
IP address information linked to subscriber information 
necessary to allow law enforcement agents to identify the IP 
address being used to download or transmit child pornography 
images and only for so long as necessary to accomplish that 
purpose.
     When law enforcement agents are able to identify 
harm that is occurring to a child in real-time, it is essential 
that they gain immediate access to the IP address and customer 
information that will allow them to locate and rescue that 
child. In response to a lawful request, ISPs must provide this 
information as quickly as possible after the administrative 
subpoena or other lawful request is received.
     The transmission of a sexual exploitative image of 
a child over the Internet is a borderless crime because it cuts 
across state, federal and, in many cases, international 
jurisdictions. Federal and state law enforcement in the U.S. 
should consider implementing the Child Exploitation Tracking 
System, or ``CETS,'' developed by Microsoft and the Royal 
Canadian Mounted Police, to enhance communication about ongoing 
investigative subjects in cases involving the sexual 
exploitation of children between and among U.S. state and 
federal law enforcement agencies. This program provides a 
platform for law enforcement agencies to track investigations 
that are being conducted across the country. This system also 
enhances the information-sharing critical to these types of 
investigations as well as reduces the likelihood of unnecessary 
duplicative efforts. Currently, CETS is being used by Canadian 
law enforcement officers throughout the territories, and the 
U.K., Spain, and Italy are beginning to implement this program 
among their law enforcement agents.
     The current reporting statute for ISPs, 42 U.S.C. 
Sec. 13032(B)(1), requires ``electronic communication service'' 
providers or ``remote computing service'' providers to report 
any ``apparent'' images of child pornography to NCMEC's 
CyberTipline. Under the statute, it is ambiguous whether 
cellular phone carriers, social networking websites, and web 
hosting companies are required to report into the CyberTipline.
     Congress should consider amending 42 U.S.C. 
Sec. 13032(B)(1) to include mandatory reporting into the 
CyberTipline for cellular phone carriers, social networking 
websites, and web hosting companies.
     Currently, 42 U.S.C. Sec. 13032(B)(4) provides 
that only providers that are found to have ``knowingly and 
willfully'' failed to report an ``apparent'' image of child 
pornography will be liable for civil penalties. To date, there 
have been no federal prosecutions under this statutory scheme.
     Congress should consider ways to ensure that all 
ISPs are proactively searching for and promptly reporting the 
images of apparent child pornography on their networks.
     Internet Service Providers should develop best 
practices and technology that will allow them to proactively 
search their networks and systems in order to identify the 
transmission of apparent child pornography images, including 
those transferred by peer-to-peer networks. Such proactive 
efforts should not expose these companies to potential 
liability under the current reporting requirements found in 42 
U.S.C. Sec. 13032, criminal liability under 18 U.S.C. Sec. 2252 
et seq., or other criminal and civil liability pursuant to 
Department of Justice antitrust enforcement actions. We 
recommend that the Department of Justice provide ISPs with 
guidance on these points to ensure that ISPs continue to 
cooperate with law enforcement agents on these investigations. 
These guidelines should also permit ISPs to perform proactive 
measures on their networks to block images of child pornography 
and, if the ISP is conducting such measures and blocking child 
pornography images on their networks, provide assurance to the 
ISP that they are not in violation of the crimes they are 
trying to prevent, such as possession and distribution of child 
pornography images.
     Social networking websites are not enforcing their 
Terms of Use as vigilantly as they could and, thus, sexual 
predators are using these websites to find potential victims.
     Social networking websites must take proactive 
steps to start cross-referencing state sex offender registry 
lists with those individuals that have profiles on their site, 
and notify law enforcement immediately of their findings for 
further investigation. States should consider enacting 
legislation, such as that proposed in the Commonwealth of 
Virginia, to require sex offenders to provide their email 
address when registering as a sex offender so that social 
networking websites can use the registries to block those 
offenders from their websites.
     Digital currencies are being used more frequently 
on commercial child pornography websites and provide another 
layer of anonymity to the purchaser and seller of these 
materials. Digital currencies on the Internet are not regulated 
anywhere in the world.
     The U.S. Department of Treasury and the U.S. 
Department of Justice should propose legislation to Congress 
aimed at providing effective controls over the burgeoning 
digital currency industry over the Internet.
     According to the Internet Watch Foundation 
(``IWF'') in the United Kingdom, approximately 50 percent of 
the child pornography content the IWF is discovering on the 
Internet appears to be hosted in the U.S. It is possible that 
this content may appear to be hosted in the U.S. but in fact is 
re-routed from another hosting company outside of the U.S. 
Currently, there is no registration requirement in the U.S. for 
web hosting companies and thus, it is difficult to know how 
many companies in the U.S. are hosting content over the 
Internet. It would benefit law enforcement investigations as 
well as provide uniformity in the number of web hosting 
companies that report to the CyberTipline if a registry for web 
hosting companies was created in the United States.
     U.S. law enforcement investigations have uncovered 
instances where obvious child pornography domain names were 
registered with a domain registry company based in the U.S. It 
would benefit U.S. law enforcement's effort to combat child 
pornography over the Internet if domain registry companies 
registered with an international body and a set of best 
practices were developed for domain registry companies.
     The IWF provides a valuable service to ISPs in the 
U.K. by identifying child pornography websites to ISPs and the 
ISPs in turn block access to the sites identified by the IWF. 
In September 2006, NCMEC announced that they would be working 
with law enforcement and the ISPs to provide a similar function 
to the IWF. Under this initiative, NCMEC will work with law 
enforcement agents to identify websites that are not the 
subject of a current investigation. ISPs that report into NCMEC 
will be advised of these websites and should block them.
     Currently, NCMEC and the IWF do not share with 
each other the lists of child pornography websites that each 
has identified. Both organizations should do so and, if NCMEC 
requires statutory authority both to share and receive these 
lists, Congress should consider enacting such legislation.
     ISPs in the United States should be encouraged to 
employ technology that allows them to block customer access to 
URLs containing child pornography images. In the U.K., ISPs and 
mobile phone companies use this technology to block a 
customer's attempt to connect to certain URLs identified by the 
IWF as containing child pornography, regardless of where such 
websites are hosted.
     The Department of Justice should explore working 
with NCMEC and its counterparts in international law 
enforcement to create a central database of website addresses 
and URLs that have been identified as containing images of 
child pornography. This central database should be continuously 
updated by the member countries as additional websites and URLs 
containing child pornography are identified, and these URLs and 
addresses should be shared with the ISPs of the member 
countries so that they may block access to those websites.
     The proliferation of child pornography images on 
the Internet demonstrates this is a global problem, with the 
content originating in many different countries. Under the 
current U.S. code, NCMEC is not explicitly authorized to 
transmit images of child pornography to international law 
enforcement agencies. In order to facilitate the sharing of 
images among law enforcement necessary to identify and rescue 
children throughout the world, Congress should consider adding 
a provision to 42 U.S.C. Sec. 13032, 42 U.S.C. Sec. 5573, and 
other relevant statutes to explicitly authorize NCMEC for law 
enforcement purposes to share images contained in their 
database with law enforcement agents in other countries.
     Many pedophiles collect ``series'' of child 
pornography images and these images are circulated around the 
world thousands if not millions of times. Further, pedophiles 
tend to build large collections of sexually exploitative images 
of children. It is critical that every feasible measure be 
taken to stop the transmission of these images.
     Some ISPs are taking proactive measures to block 
known images of child pornography that they become aware of on 
their network. This is done by taking a hash mark (digital 
fingerprint) of the images; however, an ISP's database of known 
images is only a fraction of the size of NCMEC's database.
     Under the current U.S. code, NCMEC is not 
explicitly authorized to share information embedded in the 
digital fingerprint of an image to any ISP reporting into the 
CyberTipline. Congress should consider amending 42 U.S.C. 
Sec. 13032, 42 U.S.C. Sec. 5773, and other relevant statutes to 
grant explicit authorization for NCMEC to share the digital 
fingerprint of an apparent image of child pornography to ISPs 
that report into the CyberTipline. This will enable ISPs to 
block access to many more identified images of child 
pornography.
     ISPs that report into the CyberTipline for law 
enforcement purposes should be granted a limited safe harbor 
provision for the ``transmission'' or ``possession'' of child 
pornography as it pertains to receiving digital fingerprint 
information from NCMEC and performing proactive measures on its 
network to block images of apparent child pornography.

                             II. BACKGROUND

    Crimes involving the sexual exploitation of children, 
including child pornography, have long been a challenge for 
U.S. law enforcement. Until the advent of the Internet, the 
primary obstacle facing law enforcement agents investigating 
these cases was the sheer number of ``purchasers'' and 
``possessors'' in the U.S. In addition, most of the producers 
of child pornography images were outside the United States, 
further hindering law enforcement agents' investigations and 
prosecutions.
    Despite these challenges, by the late 1980s, U.S. law 
enforcement was able to significantly reduce the creation and 
distribution of child pornography through the mails and other 
commercial avenues. These investigations were led by the U.S. 
Customs Service and the U.S. Postal Inspection Service, who 
focused their efforts on vigilantly monitoring the U.S. mail 
system and engaging in aggressive border inspection of incoming 
materials. Law enforcement officials attributed their success, 
in large part, to the fact that those who desired to purchase 
or trade child pornography images were constricted to a 
limited, and largely underground, distribution network. Up 
until the mid-1990s, the primary means of transporting and 
obtaining images of child pornography was through the mail 
system; individuals who sought to obtain child pornography 
images typically did so by responding to mail solicitations and 
advertisements in the back of magazines or newspapers. The 
stigma attached to this criminal conduct also limited the 
commercial sources for child pornography because the 
``community'' of pedophiles did not have an easy way to 
communicate and distribute images among themselves. In 
addition, most producers did not have the capability of 
developing photographs or film within the privacy of their home 
and were forced to go to brick and mortar businesses, further 
heightening the chances of law enforcement agents intercepting 
the images.
    Law enforcement's success in curbing child pornography 
during the 1980s was significantly bolstered by several Supreme 
Court decisions and by subsequent congressional legislation. In 
1982, the U.S. Supreme Court held in New York v. Ferber \1\ 
that possession of child pornography is not entitled to First 
Amendment protection and may be criminalized. In Ferber, the 
Court recognized that the use of children as subjects of 
pornographic material has long term harmful effects on the 
physiological, emotional and mental health of the child. The 
Ferber decision triggered the passing of additional state and 
federal criminal statutes which criminalized possession, 
manufacturing, and distribution of child pornography. Eight 
years later, the Supreme Court held in Osborne v. Ohio \2\ that 
mere possession or viewing of child pornography may be 
criminalized.
---------------------------------------------------------------------------
    \1\ 458 U.S. 757 (1982).
    \2\ 495 U.S. 913 (1990).
---------------------------------------------------------------------------
    Although considerable progress was made in preventing the 
distribution of child pornography images through the mails, by 
the 1980s and early 1990s, many pedophiles were already 
experimenting with the precursors to the World Wide Web,\3\ 
``newsgroups'' and Internet Relay Channels (``IRC''), in order 
to communicate and facilitate buying, selling and trading of 
images. At that time, U.S. law enforcement agents were not yet 
focused on these methods of communication and distribution of 
child pornographic materials. The growing reliance on the 
Internet, as well as the development of digital cameras, 
resulted in a significant increase in the amount of child 
pornography images and in the number of participants in this 
criminal enterprise. There are three main reasons for this: (1) 
the Internet provides an anonymous and quick method of 
transporting images, particularly since broadband was 
introduced; (2) the Internet provides an anonymous forum for 
pedophiles to communicate and connect with one another; and (3) 
digital photographs preclude the need for going to a 
photography shop to have the photographs developed, hence 
making the transmission of the images more private.
---------------------------------------------------------------------------
    \3\ Hereinafter, a reference to the ``Internet'' means the World 
Wide Web.
---------------------------------------------------------------------------
    Although it is impossible to know the exact number of child 
pornography images on the Internet, to date, the National 
Center for Missing and Exploited Children's (''NCMEC'') Child 
Victim Identification Program (``CVIP'') has reviewed more than 
six million individual images related to apparent child 
pornography. NCMEC, as well as various U.S. law enforcement 
agencies, house a database of known apparent images of child 
pornography. The CVIP database is comprised, in part, of images 
submitted by United States law enforcement agencies. The 
purpose of this database is two-fold. First, the database can 
be used to determine if a child-victim has already been 
identified. Second, the database is used by U.S. law 
enforcement agents and prosecutors as a mechanism to establish 
whether the image is of a ``real'' child, as opposed to a 
virtual image.\4\ Currently, NCMEC has been able to identify 
and, with the assistance of law enforcement agents, rescue 880 
minor children who were being subjected to sexually 
exploitative conduct.\5\
---------------------------------------------------------------------------
    \4\ In Ashcroft v. Free Speech Coalition, 535 U.S. 234 (2002), the 
U.S. Supreme Court held that only child pornography involving actual 
children may be considered ``child pornography'' for purposes of 
criminal prosecution under 18 U.S.C. Sec. 2252 et seq. Id at 254. 
Therefore, prosecutors in the U.S., unlike the rest of the world, have 
the burden of showing that an image is one of an actual child. Hence, 
the identification of minor victims in child pornography images is 
critical to proving a criminal violation in these cases.
    \5\ In addition to NCMEC, Interpol, which houses a database of all 
known images of child pornography world-wide (including NCMEC's 
images), also attempts to identify victims in the images. Interpol 
seeks to identify the country the child is from and then forwards the 
image and any information it can uncover from the image to the law 
enforcement agency in that country in the hopes that the child may be 
rescued. Like NCMEC, Interpol also tries to determine if a previously 
unidentified image of child pornography has been discovered. As of May 
2006, Interpol had assisted in identifying and rescuing 426 victims of 
online child pornography from the 475,899 images it has collected in 
its database.
---------------------------------------------------------------------------
    Just as the number of child pornography images available on 
the Internet has increased, the number of websites offering 
child pornography images is multiplying. Ernie Allen, President 
and Chief Executive Officer (``CEO''), of NCMEC, testified at 
the Subcommittee's April 4, 2006 hearing, that NCMEC estimates 
there are 100,000 websites offering images of child 
pornography. Arnold Bell, who currently heads the FBI's 
Innocent Images Unit, which is charged with investigating child 
pornography and child exploitation crimes on the Internet, 
testified that a search on Google using a single search term 
revealed 130,000 child pornography websites. The number of 
reports to NCMEC's Cybertipline,\6\ the entity created by 
Congress that is responsible for gathering reports from 
Internet Service Providers and the public regarding Internet 
child pornography, further demonstrates the growth of the 
sexual exploitation of children over the Internet. In its first 
year of operation in 1998, the Cybertipline received 4,800 
reports of child pornography. Since then, reports to the 
Cybertipline have increased almost 400 percent to approximately 
385,000 total complaints. In 2004, the Cybertipline processed 
112,000 reports. Currently, the Cybertipline handles an average 
of 1,500 reports a week of Internet child pornography.\7\
---------------------------------------------------------------------------
    \6\ The Cybertipline is primarily supported by funding from the 
Department of Justice. In addition, it receives some funding from the 
Departments of Homeland Security and State.
    \7\ Ernie Allen Testimony, Subcommittee on Oversight and 
Investigations, ``Sexual Exploitation of Children over the Internet: 
What Parents, Kids and Congress Need to Know about Child Predators,'' 
April 4, 2006.
---------------------------------------------------------------------------
    While the explosion in the number of reports to the 
Cybertipline is a reflection of the growth in online child 
pornography, that number necessarily underestimates the number 
of child pornography images that exist on the Internet as not 
all Internet Service Providers in the United States report to 
NCMEC the apparent images of child pornography they find on 
their systems. In fact, only 303 of the hundreds of ISPs 
operating in the United States are currently registered with 
and reporting to the Cybertipline. In addition, current federal 
law does not mandate that every entity that uncovers apparent 
images of child pornography on its networks or systems report 
them to NCMEC. Under 42 U.S.C. Sec. 13032, only those companies 
who provide ``electronic communication service[s]'' or ``remote 
computing service[s]'' must report ``known'' images of 
``apparent'' child pornography to the Cybertipline. Therefore, 
credit card companies, social networking websites, and cellular 
carriers who discover images of child pornography on their 
networks are not included in the mandatory reporting 
requirements of the statute, nor are they subject to any 
separate statutory reporting requirements. Also, under current 
law, ISPs and other related Internet providers are under no 
duty to proactively review or search their networks for images 
of apparent child pornography. Instead, current law only 
requires that they report apparent images of child pornography 
to NCMEC once they are made aware of them or otherwise discover 
them.
    Not only has the Internet contributed to an increase in 
child abuse images, it has also influenced the content of those 
images. According to law enforcement agents, the vast 
proliferation of child pornography images has driven a demand 
for ``new'' images of child abuse, thereby perpetuating the 
sexual abuse of children. Experts in Internet child pornography 
cases have explained that constant exposure to pornographic 
images of children on the Internet desensitizes the viewer. 
This leads the viewer to seek more violent images of children 
being sexually abused and also to seek images of younger 
victims in order to gratify his desires. Consequently, NCMEC 
reported that 39 percent of those persons caught with images of 
child sexual abuse had images of children younger than six-
years-old. In addition, NCMEC found that 19 percent of those 
persons arrested on child pornography charges between July 2000 
and June 2001 possessed images of children younger than three-
years-old.
    As well as providing ready access to an increased number of 
child pornography images, the Internet has provided a new way 
for child predators and pedophiles to access their victims. 
Every day, more teenagers and children are online. The Pew 
Internet & American Life Project found in 2005 that 21 million 
teenagers now use the Internet, with 50 percent online daily. 
Teenagers not only ``surf'' the Internet, but they communicate 
with people they meet online through email, Instant Messaging 
services, and personal webpages on social networking websites 
such as MySpace, Xanga, or Facebook. Child predators often use 
these forms of communication to ``groom'' their potential child 
victims. By communicating with children regularly over the 
Internet, the child predator is able to befriend the child and 
make him or her comfortable with sharing personal information 
with someone he or she has not met face-to-face. Eventually, 
these communications can become sexual in nature, often as a 
precursor to asking the child to meet the predator or to share 
sexual images of herself or himself. In fact, NCMEC released a 
study in August 2006 that found that one in seven children from 
the ages of 10 to 17 years-old report that they have received a 
sexual solicitation from someone they met on the Internet.
    Experts, including noted forensic pediatrician Dr. Sharon 
W. Cooper, agree that the physical and psychological harm 
suffered by the victims of Internet child pornography continues 
long after the abuse ends.\8\ In large part, this is because 
the image on the Internet exists in perpetuity, essentially re-
abusing the child each time it is traded or sold and viewed by 
another pedophile. The image, which is essentially a crime 
scene, can never be destroyed or removed from the Internet, 
even if the perpetrator eventually goes to prison. The result 
is that the child is continually re-victimized each time 
someone clicks on his or her image, forwards it, or distributes 
it. This is the reason why victims of Internet child 
pornography like Masha Allen, a child victim who testified at 
the Subcommittee's May 3, 2006 hearing, have pleaded for every 
effort to be made to prevent the distribution of child 
pornography images. As Ms. Allen stated in her testimony, the 
thing that upset her most about the abuse she suffered is that 
her images would be on the Internet ``forever.''
---------------------------------------------------------------------------
    \8\ Dr. Cooper and other physicians and experts in child sexual 
exploitation authored a treatise on child sexual exploitation and 
addressed the impact of sexual exploitation on child victims throughout 
their lives, See Sharon W. Cooper, Richard J. Estes, et al., Medical, 
Legal, & Social Science Aspects of Child Sexual Exploitation A 
Comprehensive Review of Pornography, Prostitution, and Internet Crimes, 
2005.
---------------------------------------------------------------------------
    The prevalence of online child pornography also has a 
distinct psychological impact on those who collect and possess 
it. According to psychologists who study the issue, individuals 
collect child pornography not only for sexual gratification but 
as a ``plan for action.'' \9\ A study conducted by Dr. Andres 
C. Hernandez and published in a poster presentation entitled 
``Self Reported Contact Sexual Offenses by Participants in the 
Federal Bureau of Prisons' Sex Offender Treatment Program: 
Implications for Sex Offenders'' supports the notion that 
viewing child pornography is likely to lead to contact offenses 
involving a child. The study showed that, of the inmates who 
elected to participate in the Federal Bureau of Prisons Sex 
Offender Treatment Program, 76 percent of those who were 
convicted on charges related to Internet sex crimes, such as 
possession of child pornography or luring a child, had also 
committed sexual contact offenses against children. This 
conclusion was based on polygraph examinations of offenders who 
chose to enroll in Dr. Hernandez's program. This link between 
viewing or possessing child pornography and molesting a child 
has been demonstrated in other studies as well, including one 
conducted by the United States Postal Inspection Service 
beginning in 1997. This study found that 33 percent of the 
2,433 individuals arrested by USPIS agents since 1997 for using 
the U.S. mail and the Internet for the sexual exploitation of 
children had molested children. These findings are alarming and 
lend credence to the notice that exposure to images of child 
pornography can, in fact, create child molesters, and hence, 
result in more child-victims.\10\
---------------------------------------------------------------------------
    \9\ Dr. Sharon Cooper Testimony, Subcommittee on Oversight and 
Investigations, ``Sexual Exploitation of Children over the Internet: 
What Parents, Kids and Congress Need to Know about Child Predators,'' 
April 4, 2006.
    \10\ A polygraph study currently being conducted in the Netherlands 
of convicted sex offenders further supports Dr. Hernandez's finding 
that a link exists between possessing child pornography images and 
committing contact crimes against children.
---------------------------------------------------------------------------
    Of additional concern is that commercial Internet child 
pornography has become a lucrative and growing business. 
Although it is impossible to pinpoint the revenue generated by 
an illegal business, such as commercial child pornography, some 
estimates indicate that commercial child pornography may 
generate billions of dollars a year in revenue.\11\ To evade 
detection by law enforcement agents, the payment schemes 
employed by commercial child pornography websites are 
increasingly complex and involve the use of digital and 
electronic currencies and other forms of barter. Those 
individuals who sell child pornography images often set up 
fictitious businesses in order to obtain a merchant account for 
credit card processing. The technology supporting these 
websites is equally sophisticated. It is not unusual for 
websites to be registered using fictitious names and to use 
servers in several different countries to host images, thereby 
making it extremely difficult for law enforcement agents to 
identify the responsible individuals. Even so, according to 
several reports published quarterly by the Internet Watch 
Foundation (``IWF'') \12\ in the United Kingdom, the United 
States appears to be hosting a majority of the child 
pornography content on the Internet. Law enforcement agents 
believe that this may be due to the fact that the United States 
has some of the fastest and most advanced Internet connectivity 
in the world, making U.S. servers especially appealing to 
commercial child pornography operators looking for servers to 
host their content. It is unclear, though, whether all of the 
websites that the IWF claims are hosted in the U.S. are, in 
fact, hosted here or whether a proxy server is being used. 
Currently, web hosting companies in the U.S. do not typically 
review any of the content on their servers nor do they report 
into NCMEC's Cybertipline on a regular basis.\13\
---------------------------------------------------------------------------
    \11\ See Cassel Bryan-Low, ``Dangerous Mix: Internet Transforms 
Child Porn Into Lucrative Criminial Trade--Company in Belarus Collected 
Millions From Pedophiles; A Landmark Prosecution--Agent's Rendezvous in 
Paris,'' Wall Street Journal, Jan. 17, 2006, at 1.
    \12\ The Internet Watch Foundation (``IWF'') and its ``hotline'' in 
the United Kingdom are similar to the NCMEC and the Cybertipline in the 
United States. Like the NCMEC, the IWF is responsible for gathering 
reports from ISPs and the public of Internet child pornography. 
However, the IWF, which partners with the U.K. Home Office and 
Department of Trade and Industry, receives most of its funding from 
U.K. Internet Service Providers, cellular or mobile companies, and the 
telecommunications industry. In addition, the IWF operates a ``notice 
and takedown'' system, by which it distributes the Uniform Resource 
Locator, or ``URL,'' of Internet child pornography images to the 
Internet Service Providers in the U.K. The providers then use various 
forms of technology to ``block'' the URLs of child pornography images, 
thereby preventing the public from accessing those images from the 
United Kingdom.
    \13\ Under 42 U.S.C. Sec. 13032, an ``electronic communication 
service provider'' is required to report ``known'' and ``apparent'' 
images of child pornography to the Cybertipline. It is unclear if web 
hosting companies would fall under the definition of ``electronic 
communication service provider'' and thus, may have no statutory 
obligation to report to the Cybertipline. NCMEC has informed Committee 
staff that a few web hosting companies do voluntarily report into the 
Cybertipline.
---------------------------------------------------------------------------
    Law enforcement agents at both the state and federal levels 
are working to combat the proliferation of sexually 
exploitative images of children over the Internet. In the U.S., 
there are four primary law enforcement agencies which 
investigate the sexual exploitation of children over the 
Internet. These agencies are: (1) the Federal Bureau of 
Investigation (``FBI''); (2) Immigrations and Customs 
Enforcement (``ICE''); (3) the U.S. Postal Inspection Service 
(``USPIS'') and (4) the Internet Crimes Against Children 
(``ICAC'') Task Forces. Currently, agents from each of these 
law enforcement agencies as well as the U.S. Marshals Service 
are assigned to NCMEC and assist in investigating the tips 
reported to the Cybertipline. All of these law enforcement 
entities have jurisdiction over cases involving the sexual 
exploitation of children; however, each has a primary mission 
and jurisdiction that dictates what types of cases the agents 
will work.
    Within the FBI, the Innocent Images National Initiative is 
responsible for investigating Internet child pornography cases. 
Fifteen agents and 22 analysts are assigned to this unit, based 
in Calverton, Maryland. The FBI also has agents in field 
offices around the country that may be assigned a child sexual 
exploitation case; however, no field agents exclusively work on 
child sexual exploitation cases over the Internet. For cases 
with an international nexus, the Cyber Crimes Center of ICE has 
jurisdiction. Currently, 10 to 12 agents within the CyberCrimes 
Center are dedicated to investigating exclusively child 
exploitation crimes, and in the field, there are the equivalent 
of 221 ICE agents dedicated to Operation Predator cases, an 
initiative developed by the Department of Homeland Security and 
ICE to identify, investigate, and arrest child predators. 
Finally, 35 postal inspection agents are dedicated to 
investigating Internet child pornography cases that involve the 
use of the mails on a full-time basis.
    On the state level, the ICACs are federally funded and 
trained state and local police officers dedicated to 
investigate crimes related to the sexual exploitation of 
children over the Internet. The ICACs are funded primarily 
through the Department of Justice's Office of Juvenile Justice 
and Delinquency Prevention (``OJJDP'') and work cooperatively 
with their counterparts in federal law enforcement. During 
fiscal year 2006, Congress appropriated $14,315,000 to OJJDP 
for ICAC Task Force operations. In addition to ICAC trained 
officers, there are also many state and local law enforcement 
officers that work on online child sexual exploitation cases, 
both in proactive and reactive investigations.
    Recently, the Department of Justice (``DOJ'') announced a 
series of initiatives aimed at investigating and prosecuting 
the sexual exploitation of children over the Internet. In 
February 2006, Attorney General Gonzales announced ``Project 
Safe Childhood.'' The goal of the project is to coordinate 
efforts between state, local, and federal law enforcement 
authorities when investigating Internet crimes against 
children. On May 17, 2006, Attorney General Gonzales announced 
that Project Safe Childhood would be implemented on a national 
level. The initiative requires each United States Attorney to 
designate a Project Safe Childhood coordinator within two weeks 
and to begin meeting with local partners to develop a plan for 
their district within 90 days. In addition, U.S. Attorneys must 
partner with their local ICACs and federal law enforcement 
agents in order to increase federal involvement in child 
pornography cases and to train state and local enforcement and 
educate local communities.
    On April 21, 2006, DOJ submitted proposed legislation to 
Congress to amend 42 U.S.C. Sec. 13032. DOJ's proposed 
amendment would triple the fines imposed on electronic 
communications services providers who knowingly and willfully 
fail to report to NCMEC's Cybertipline, as required by 42 
U.S.C. Sec. 13032. Under the proposed legislation, delinquent 
providers would be assessed $150,000 for an initial violation 
and $300,000 for each subsequent violation. In addition to 
increasing fines for those who knowingly and willfully fail to 
report, on May 15, 2006, DOJ proposed a second piece of 
legislation that would impose fines on providers who 
negligently fail to report. The current statute requires that 
the provider ``knowingly and willfully'' failed to report. 
Under the proposed legislation, the provider would be fined 
$50,000 for the initial, negligent failure to report and 
$100,000 for each subsequent violation. Under the current 
statutory scheme, DOJ has never prosecuted a provider. Neither 
proposal was enacted by the House or Senate.

                  III. THE SUBCOMMITTEE INVESTIGATION

    In January 2006, the Subcommittee on Oversight and 
Investigations initiated its investigation of the sexual 
exploitation of children over the Internet to examine the scope 
of the problem; the approach of law enforcement; the entities 
involved; and ways to prevent the proliferation of child 
pornography on the Internet. The investigation was prompted by 
an article in The New York Times by Kurt Eichenwald entitled 
``Through his Webcam, a Boy Joins a Sordid Online World.'' The 
article featured the story of Justin Berry, now a 19-year-old 
young man. Beginning at the age of 13-years-old, Justin was 
repeatedly victimized by child predators who contacted him over 
the Internet when they saw his image on a webcam, which he had 
received as a free promotional gift to subscribers of 
Earthlink. In addition to describing the abuse he suffered at 
the hands of the individuals whom he met online, Justin also 
described how some of these individuals encouraged him and even 
assisted him in developing and operating commercial pornography 
websites featuring sexual images and videos of Justin. In that 
article, Justin also stated that he provided prosecutors in the 
Department of Justice's Child Exploitation and Obscenity 
Section (``CEOS''), and the FBI with specific information about 
those individuals involved in the commercial child pornography 
business, including the names of the individuals who helped him 
host the websites and process payments. As a result of the 
information Justin voluntarily provided to DOJ, he was granted 
immunity. According to the article, Justin was concerned about 
how DOJ and the FBI handled the information that he provided to 
them about a commercial child pornography enterprise.
    Based on the Committee's jurisdiction over matters related 
to the Internet, telecommunications and consumer safety, 
Committee leadership instructed staff to review U.S. law 
enforcement efforts to combat online child pornography, the 
role of NCMEC as a conduit between law enforcement and private 
industry, and how private industry is responding to this threat 
against children over the Internet. As the extent of this 
criminal activity became clear, the investigation was expanded 
to include all methods by which the Internet was used in the 
sexual exploitation of children.

A. Law Enforcement Efforts To Combat the Sexual Exploitation of 
        Children Over the Internet

    In addition to investigating Justin Berry's allegations 
regarding the Justice Department and FBI, the Committee also 
began investigating information reported by Kurt Eichenwald 
with regard to the ease with which he could locate images of 
child sexual abuse on the Internet and the commercial 
enterprises that are associated with child exploitation over 
the Internet. To that end, Committee staff met with and 
interviewed various law enforcement agencies and other groups 
to gain a better understanding of the scope of the problem and 
how they are working to combat the proliferation of sexually 
exploitive images of children over the Internet. In particular, 
Committee staff met with officials from NCMEC and visited 
NCMEC's offices in Alexandria, Virginia, in order to better 
understand how the Cybertipline operates.
    Committee staff also visited the offices of the federal law 
enforcement agencies that are responsible for investigating the 
online exploitation of children, including the FBI's Innocent 
Images unit and ICE's Cyber Crimes Center, and met with agents 
and officials from the U.S. Postal Inspection Service. 
Committee staff learned that while there is an active federal 
law enforcement effort to combat Internet child pornography, 
the vast majority of investigations--approximately 70 percent--
take place at the state or local level. For this reason, 
Committee staff also interviewed several state ICAC Task Force 
investigators.
    Interviews and meetings with law enforcement officials and 
agents revealed several key factors which have contributed both 
to the proliferation of child abuse images on the Internet as 
well as the obstacles law enforcement agents face when they try 
to identify the individuals who possess and distribute these 
images. First, and perhaps most daunting, is the number of 
child abuse images on the Internet. As mentioned previously, 
United States law enforcement estimates that there are 
approximately 3.5 million known child pornography images 
online. In addition, the individuals who trade and distribute 
child pornography images use sophisticated technology and other 
means to evade identification by law enforcement agents. For 
example, law enforcement agents said that individuals who 
download images can use ``anonymizers'' or encryption 
technology which makes it difficult to find the individuals, 
much less prove that they possessed or downloaded the images. 
Law enforcement agents also stated that most Internet Service 
Providers often do not retain Internet Protocol, or IP, address 
data for a sufficient period of time. Without this data, law 
enforcement agents are unable to identify the individual at a 
certain IP address who has downloaded or distributed child 
pornography. Further, law enforcement agents are concerned that 
the response time of ISPs to law enforcement inquiries or 
subpoenas seeking the identity of a customer assigned to a 
particular IP address varies and is not always timely. Dr. 
Frank Kardasz, a member of the Arizona ICAC Task Force, 
testified that a two-day response time to law enforcement 
subpoenas for IP address information would be ideal.
    Law enforcement officials also explained that the payment 
schemes used by commercial child pornography websites are 
becoming increasingly complex and sophisticated, again, as a 
method to evade detection. One example cited by law enforcement 
officials and by NCMEC is the increasing use of digital 
currencies as a method of payment on commercial child 
pornography websites. Payment by digital currencies makes it 
more difficult for law enforcement agents to trace the payment, 
and thus, the source.
    In addition to examining how law enforcement officials 
investigate and prosecute those who exploit children over the 
Internet, Committee staff reviewed and analyzed existing 
federal law with regard to criminal penalties for possession, 
creation, and distribution of child pornography. A review of 
federal and state law showed that while penalties for federal 
charges can be quite severe--for example, the federal sentence 
for distribution of child pornography is up to 20 years, with a 
five year minimum mandatory sentence, per image--there is great 
disparity among state penalties for crimes involving child 
pornography. Because the vast majority of these online child 
sexual exploitation cases are prosecuted on the state level, it 
is imperative that all states consider adopting strict 
sentencing schemes for these crimes and laws that clearly 
address the online environment in which these crimes are now 
committed. For example, all states should consider adopting 
laws that make clear that sexual solicitation of a person 
believed to be a minor online is a felony offense, with 
automatic jail time. In addition, Committee staff learned that 
possession of child pornography currently is not a felony 
offense in all 50 states. This needs to be considered 
immediately by the states.
    The Subcommittee on Oversight and Investigations held its 
first two days of hearings on the issue of sexual exploitation 
of children over the Internet on April 4 and 6, 2006. This 
hearing, entitled ``Sexual Exploitation of Children Over the 
Internet: What Parents, Kids and Congress Need to Know about 
Child Predators,'' focused on explaining the scope of the 
problem, U.S. law enforcement's approach to investigating and 
prosecuting child pornography crimes, the impact of sexual 
exploitation on its victims, and efforts by Internet safety 
groups to educate parents and children.
    On April 4, the witnesses included Mr. Ernie Allen of 
NCMEC; a child victim, Justin Berry; The New York Times 
reporter Kurt Eichenwald; Dr. Sharon Cooper, a forensic 
pediatrician specializing in child sexual exploitation; and Ms. 
Teri L. Schroeder and Ms. Parry Aftab, advocates for Internet 
safety from i-Safe and Wired Safety, respectively. In addition, 
Mr. Kenneth Gourlay of Michigan, whom Justin Berry had 
identified as the man who first molested him after meeting him 
online, appeared pursuant to Committee subpoena. Mr. Gourlay 
asserted his Fifth Amendment right against self incrimination 
and refused to testify in response to the Subcommittee's 
questions.\14\
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    \14\ Immediately following the hearing, Mr. Gourlay's residence was 
searched pursuant to a search warrant obtained by the Michigan Attorney 
General. Just one month later, on May 15, 2006, Mr. Gourlay was 
arrested on 10 felony counts related to the allegations made by Justin 
Berry during the Subcommittee hearing, including Criminal Sexual 
Conduct, Child Sexually Abusive Activity, Using a Computer to Commit a 
Crime, Distribution of Child Sexually Abusive Activity and Accosting a 
Child for Immoral Purposes. On September 19, 2006, Mr. Gourlay was 
charged with 18 additional felony counts of Criminal Sexual Conduct. 
The charges are currently pending before a Michigan state court.
---------------------------------------------------------------------------
    Testifying on April 6 were Mr. William E. Kezer, Deputy 
Chief Inspector, and Mr. Raymond C. Smith, Assistant Inspector 
in Charge, on behalf of the U.S. Postal Inspection Service; Dr. 
Frank Kardasz, Phoenix Police Department Sergeant, and Mr. 
Flint Waters, Lead Special Agent of the Wyoming Division of 
Criminal Investigation, on behalf of the Arizona and Wyoming 
ICAC Task Forces, respectively; Mr. John P. Clark, Deputy 
Assistant Secretary, and Mr. James Plitt, Director of the Cyber 
Crimes Center, on behalf of the Department of Homeland 
Security, Immigration and Customs Enforcement; and Mr. Greer 
Weeks, an expert in state child pornography laws and sentences. 
In addition to these witnesses, in order to better understand 
the approach of law enforcement to investigating and 
prosecuting crimes involving the online sexual exploitation of 
children, the Committee requested that the Honorable Alice S. 
Fisher, the Assistant Attorney General for the Criminal 
Division, and Mr. Andrew Oosterbaan, Chief of the Child 
Exploitation and Obscenity Section, testify on behalf of the 
Justice Department, and that Mr. Raul Roldan, Section Chief, 
Cyber Crime Section of the Cyber Division, and Mr. Arnold E. 
Bell, Unit Chief, Innocent Images Unit, testify on behalf of 
the FBI. In lieu of the requested witnesses, the Department of 
Justice and the FBI designated Mr. William Mercer, Principle 
Associate Deputy Attorney General and United States Attorney 
for the District of Montana, and Mr. Chris Swecker, Acting 
Assistant Executive Director of the FBI, to testify on their 
behalf. Subsequently, at the Committee's hearing on May 3, 
2006, Ms. Fisher, Mr. Roldan, and Mr. Bell appeared before the 
Committee and testified about their departments' approach to 
sexual crimes against children over the Internet.
    On May 3, 2006, the Subcommittee held a third day of 
hearings dedicated to law enforcement's approach to online 
child pornography crimes, specifically, the efforts of the FBI 
and Department of Justice. As mentioned previously, testifying 
on behalf of the Justice Department was Ms. Fisher and, on 
behalf of the FBI, Mr. Roldan and Mr. Bell. The witnesses 
described recent initiatives by the Justice Department to 
combat Internet crimes against children, including Project Safe 
Childhood, prosecutions by the Child Exploitation and Obscenity 
Section (``CEOS'') of DOJ, and FBI investigations. In addition, 
Ms. Fisher, Mr. Roldan, and Mr. Bell were asked to address 
their departments' action with respect to charges made and 
information provided by Justin Berry. In large part, the 
witnesses testified that they were not able to respond to 
questions about Mr. Berry's allegations due to ongoing 
investigations related to his case.
    In addition, the Subcommittee also heard testimony from Ms. 
Masha Allen, a 13-year-old girl, who was adopted from Russia 
when she was 5 years old by a divorced man from Pittsburgh, 
Pennsylvania, named Matthew Mancuso. Masha was accompanied at 
the hearing by her attorney, James Marsh; her advisor, Maureen 
Flatley; and, at her request, television news reporter Nancy 
Grace. From the time she arrived in the U.S. with Mancuso, she 
was repeatedly sexually assaulted by him and images of her 
abuse were posted on the Internet by Mancuso. After 
approximately five years of sexual abuse, Masha was rescued as 
the result of an undercover Internet investigation by the 
Chicago Police Department. Mancuso is currently serving a 30-
year federal sentence and will then serve a consecutive state 
sentence on charges related to his abuse of Masha. In addition 
to describing her harrowing ordeal at the hands of Mancuso, 
Masha also raised questions about the conduct of the U.S. 
adoption agencies that worked with Mancuso to place a 5-year-
old girl with him. The Subcommittee held a hearing on September 
27, 2006 to follow-up on Masha's questions and concerns.
    The April and May hearings revealed important information 
about the scope of the problem, law enforcement's efforts to 
fight it, and the efforts to educate parents and children about 
the dangers that exist online. In short, the sexual 
exploitation of children over the Internet is a problem of 
great urgency. As Mr. Ernie Allen, President and C.E.O. of 
NCMEC, testified, sexual abuse images of younger children and 
even toddlers are becoming more prevalent over the Internet. 
For example, on March 15, 2006, the Department of Justice and 
ICE announced a bust of an Internet child pornography ring in 
the United States, Canada, the United Kingdom, and Australia in 
which the images seized included a live, streaming video of an 
infant who was less than 18 months old being raped by an adult 
male.
    It is also clear that while both federal and state law 
enforcement agents are actively pursuing investigations of 
online child pornography, law enforcement either needs 
additional resources or better prioritization and organization 
within their agencies, or both, to allow additional funding for 
personnel, forensic assistance, and training for state agents. 
In addition, law enforcement agents explained that the data 
retention policies of some Internet Service Providers are 
inadequate and, in some cases, their failure to retain for a 
sufficient period of time the information that links an IP 
address to an Internet customer has prevented law enforcement 
agents from identifying child predators and rescuing children. 
For example, Mr. Flint Waters of the Wyoming ICAC testified 
that, in one case, an ICAC investigator intercepted the 
transmission over a peer-to-peer network of a video showing the 
rape of a 2-year-old child and was able to trace the video to a 
computer in Colorado. When the ICAC agent approached the 
Internet Service Provider, Comcast, to request the customer 
information for the IP address in Colorado, Comcast informed 
the agent that it had not retained the customer records for 
that address. As of the date of the hearing, to Mr. Waters' 
knowledge, the child in the video had not been identified.
    Following the April hearings, Committee staff traveled to 
the United Kingdom and to Interpol headquarters in France to 
meet with government, law enforcement, and industry officials 
to discuss how they are working to combat Internet child 
pornography. In the United Kingdom, Committee staff met with 
officials from the United Kingdom's Home Office, the equivalent 
of the United States Department of Justice; the Department of 
Trade and Industry; the Internet Watch Foundation; members of 
the mobile telephone industry; the Internet and 
telecommunications industries; and child advocates. In 
addition, Committee staff met with the Chief Executive and 
Staff of the Child Exploitation and Online Protection Centre 
(``CEOP''), a new quasi-government organization that partners 
law enforcement with the business sector, charities, and other 
organizations. CEOP is dedicated solely to fighting and 
investigating sexual crimes against children, particularly 
Internet sex crimes. Committee staff also traveled to Lyon, 
France to meet with agents from Interpol, the international 
police organization, in order to learn more about Interpol's 
database of child abuse images and its efforts to identify and 
rescue the children abused in these images.
    The meetings with British officials and with Interpol 
revealed important differences between the approach of U.S. law 
enforcement and its international counterparts. For example, 
the United Kingdom employs a ``notice and takedown'' approach 
in fighting child pornography. Under this approach, which was 
first implemented by some companies in 2004, Internet Service 
Providers voluntarily agreed to block access to URLs identified 
by the IWF as containing images of child pornography.\15\ 
British officials attribute the fact that only .2 percent of 
websites containing child pornography images are currently 
hosted in the U.K.--down from 18 percent in 1997--in part to 
this blocking approach, whereas the IWF has found that 51.1 
percent of websites containing child pornography content are 
hosted in the United States.\16\ According to these officials, 
in the United States, websites with child pornography are not 
immediately taken down after law enforcement learns of them; 
instead, the websites are left up so that law enforcement 
agents have an opportunity to investigate and prepare charges 
against the individuals operating the site.
---------------------------------------------------------------------------
    \15\ The website of the IWF can be found at www.iwf.org.uk.
    \16\ Internet Watch Foundation 2006 Half Yearly Report.
---------------------------------------------------------------------------
    A recent proposal by NCMEC supports a dual approach of 
furthering law enforcement investigations and shutting down the 
websites. NCMEC, which announced the initiative at the 
Subcommittee's September 26, 2006 hearing, explained that they 
are working with law enforcement and the industry to devise a 
system that is similar to the U.K.'s notice and takedown model. 
Notably, this approach was suggested by NCMEC after the 
Committee expressed an interest in setting up a system in the 
U.S. similar to the IWF's ``notice and takedown'' approach to 
child pornography websites. According to NCMEC's proposal, law 
enforcement agents will first be notified of child pornography 
websites so that they have the opportunity to investigate the 
website and gather evidence. Then, if the law enforcement 
agents agree, NCMEC will forward the Internet address for the 
website to the ISPs so that the ISPs may block the website on 
their system. By involving law enforcement from the beginning, 
the NCMEC approach might avoid an issue faced by those systems 
that primarily rely on notice and takedown to put an end to the 
proliferation of online child pornography: child pornography 
websites move Internet addresses constantly to avoid detection 
and, if subject to a takedown, simply move their content to a 
new Internet address. In addition, peer-to-peer systems, rather 
than websites, are becoming a popular way to trade child 
pornography images because these systems make it difficult for 
law enforcement agents to trace and intercept the transmission 
of images. A notice and takedown approach is largely 
ineffective against this type of technology.
    The cooperation and sharing of ideas among U.S. and 
international law enforcement, NCMEC, the IWF, and other 
international groups must continue so that the fight against 
online child pornography can be won. NCMEC's recent notice and 
takedown proposal is a prime example of how law enforcement can 
improve its tools and methods by learning from the experience 
of other countries. The experience of foreign industry in 
preventing child pornography can also be a resource for U.S. 
businesses. In the United Kingdom, British telecommunications 
companies and some mobile telephone companies that provide 
connectivity to the Internet have developed systems intended to 
prevent their customers from connecting to child pornography 
websites.

B. The Role of Internet Service Providers and Social Networking 
        Websites in Combating the Sexual Exploitation of Children Over 
        the Internet

    In order to examine the role of the U.S. Internet Service 
Provider industry in the fight against child pornography, the 
Subcommittee convened two days of hearings on June 27 and 28, 
2006 entitled ``Making the Internet Safe for Kids: The Role of 
ISPs and Social Networking Sites.'' The Internet Service 
Providers testifying at this hearing included representatives 
from America Online (``AOL''), Microsoft, Google, Yahoo, 
Earthlink, Comcast, and Verizon; the social networking websites 
included MySpace, Xanga, and Facebook. Commissioner Pamela 
Jones Harbour of the Federal Trade Commission, and Diego Ruiz, 
Deputy Chief, Office of Strategic Planning and Policy Analysis, 
of the Federal Communications Commission, also testified about 
the role of their agencies in regulating Internet companies.
    Also testifying was television news journalist Chris 
Hansen, who led a multi-part investigative series that aired on 
Dateline NBC, entitled ``To Catch a Predator.'' The series 
focused on the activities of child predators on the Internet 
and showed how actual child predators contacted and groomed 
individuals they believed were potential child- victims. The 
individuals that the predators communicated with online were 
actually adult volunteers for an online watch-dog group, 
Perverted Justice. The adult volunteers posed online as 13- or 
14-year-old children who were home alone and receptive to an 
in-person meeting with an adult whom they had met on the 
Internet. In his testimony, Mr. Hansen described the online 
grooming process he observed between child predators and the 
``children'' and noted how quickly the predator would turn the 
conversation into one overtly sexual in nature. Mr. Hansen also 
noted that the individuals who were identified and arrested as 
a result of the series--at the time of the hearing, 98 of whom 
had been charged criminally--defied characterization. They came 
from all walks of life and, upon meeting them, many did not 
seem to be particularly dangerous or suspicious.
    The primary issue addressed at these hearings was whether 
the Internet industry as a whole was doing enough proactively 
to prevent the transmission of child pornography images over 
their systems and networks. In addition, the Committee was 
interested in whether the policies of these companies, 
particularly the companies who provide content and accept 
advertising on their websites, clearly prohibited content or 
advertising that involves the sexual exploitation of children. 
Each company discussed the measures they take to keep child 
pornography from being either hosted or distributed over their 
systems. The type of approach adopted by a company is dictated 
by several factors including: (1) the type of service provider 
they are, that is, whether the company provides ``content,'' 
like Yahoo!, or is primarily a ``pipeline,'' like Verizon; (2) 
the types of products they offer on their network, such as 
email, instant messaging (``IM''), news groups, and search 
functions; (3) the size of their customer base; and (4) the 
extent to which the company expends resources in both reactive 
and proactive measures to review its network for violations of 
the law, its ``Terms of Use'' or both.
    AOL, a content provider with paid subscribers, explained 
that it creates a ``digital signature'' of apparent child 
pornographic images it finds on its network and then collects 
those signatures in a digital library. Any image files 
transmitted over AOL's network are compared to the digital 
library. In this way, AOL can identify and block the 
distribution of images that it has previously identified as 
child pornography. Other providers, like Yahoo! and MSN, use 
filters as well as algorithms in an attempt to identify child 
pornography images transmitted over their networks and shared 
through their programs, such as chatrooms.
    Network service providers, or ``pipelines,'' like Verizon 
or Comcast, are in a somewhat different position. Unlike 
content providers, network service providers mainly provide 
access to the Internet but do not provide other services like 
chat, groups, or search functions. At this point, network 
service providers do not employ the proactive measures that 
content providers use to identify the transmission of child 
pornography images over their networks. Whether this is due to 
legal or technical constraints their efforts with respect to 
child pornography images are mostly reactive. As some pipeline 
providers explained to the Subcommittee, the primary way they 
discover child pornography images on their networks is by 
customer reports or complaints, which the pipeline provider 
then forwards to NCMEC. Pipeline providers also respond to law 
enforcement agents' requests and subpoenas for customer 
information.
    In addition to their proactive measures, the Internet 
Service Providers also explained their data retention policies 
and addressed the announcement of the Department of Justice 
that it intended to explore with ISPs establishing a uniform 
data retention policy for the purpose of enhancing law 
enforcement's investigations of Internet child pornography.\17\ 
As discussed previously, law enforcement agents who testified 
at the Subcommittee's April and May hearings explained that 
inadequate data retention policies had prevented them in some 
cases from identifying individuals who create or distribute 
child pornography images over the Internet.
---------------------------------------------------------------------------
    \17\ At this time of the hearing, AOL retained the data that links 
an IP address to a customer's name for 90 days; Earthlink for seven 
years; Comcast for 180 days; Verizon for nine months.
---------------------------------------------------------------------------
    While all the Internet Service Providers testified that 
they report images of apparent child pornography to NCMEC when 
they discover it on their networks and that they attempt to 
respond to law enforcement agents' requests and subpoenas as 
expeditiously as possible, the data retention policies of the 
ISPs that testified at the hearing vary widely, from 60 days to 
seven years. Testimony provided at the hearing suggests that 
the cost of data retention is a determining factor in setting 
the retention period. AOL, for example, testified that 
retaining the IP addresses for each user session of every AOL 
user would cost $44 million per year. Several factors have a 
bearing on the cost, for example, the types of services offered 
by the provider, the number of users, and whether the site is 
free or available only to paid subscribers. However, law 
enforcement officials have stressed that it is the ISPs that 
provide connectivity to the Internet which need to retain IP 
addresses for at least one year for purposes of child 
pornography investigations.
    The operations of social networking websites were also 
examined at the June hearing. These websites have become 
increasingly popular in recent years, especially among 
preteens, teenagers and young adults. Registered users with 
social networking websites are able to build personal webpages. 
These webpages often contain personal information about the 
user, such as where he or she attends school or works, their 
likes and dislikes, links to their friends' webpages or other 
websites, contact information, and photographs.
    Recently, social networking websites have received a great 
deal of scrutiny as child predators have used the information 
on children's webpages to contact them and to groom them in 
anticipation of meeting them in person. Facebook, MySpace, and 
Xanga testified about the safeguards they have implemented on 
their websites.\18\ Users of each website have the option of 
making their profiles private, thereby preventing other users 
from viewing their personal webpage. On MySpace, the 
``private'' setting is the default setting for any user who 
admits to being under the age of 16 years. Xanga \19\ employs 
similar features which allow a user to restrict their webpage 
to only other Xanga members or to other designated users, 
respectively. Xanga has also developed a safety feature, called 
``Footprints,'' which, when activated, allows a Xanga member to 
see the usernames of individuals who have signed into his or 
her webpage. Similarly, Facebook offers a privacy option which 
permits the user to determine who can see particular pieces of 
information about them, including their entire webpage.
---------------------------------------------------------------------------
    \18\ At the time of the hearing, MySpace had 80 million registered 
users; Xanga had 27 million; and Facebook had more than 8 million. 
While Facebook, MySpace, and Xanga are each social networking websites, 
they operate differently with respect to how users can obtain access to 
the website. MySpace and Xanga are open to the general public. Anyone 
with Internet access can open a MySpace or Xanga account and build a 
personal webpage. In contrast, to join Facebook, a user must be 
validated into one of Facebook's online communities. The communities 
are largely organized by high schools and colleges, but there are also 
work networks. In order to be validated, a potential user must have 
either a ``.edu'' email address or similar associated with a school or 
university email domain or, if a high school does not have a domain, 
high school users can join if they receive an invitation from a college 
user who graduated from that high school. The high school user who 
received the invitation will then invite other students from his high 
school to join; to ensure that individuals who do not have a .edu 
domain name are, in fact, students at a particular high school, 
Facebook places a computer code within the invitation email that 
confirms the individual who joined was the same individual who received 
the invitation. Additionally, members of Facebook only have access to 
the profiles of members within their school community. In this way, 
Facebook users only have access to their school communities. To view 
the profile of a user outside that community, Facebook members must 
receive permission from that user. Members of work communities only 
have access to the profiles of other users who have joined the same 
regional network they have joined. As MySpace and Xanga are not 
organized according to work, school, or regional communities, MySpace 
and Xanga users have access to any other webpage on the website, unless 
a user has activated a privacy setting that limits access to approved 
MySpace or Xanga users.
    \19\ On September 7, 2006, the Federal Trade Commission (``FTC'') 
announced that it had reached a settlement with Xanga related to 
Xanga's alleged violations of the Children's Online Privacy Protection 
Act (``COPPA''). The FTC found that Xanga, in violation of COPPA, had 
improperly collected, used, and disclosed personal information from 
children under the age of 13 without first notifying their parents and 
obtaining consent. Under the settlement Xanga paid a $1 million fine to 
the FTC.
---------------------------------------------------------------------------
    In addition to offering a privacy setting, the social 
networking websites who testified at the June hearing allow 
their users to report inappropriate content by clicking on 
links or tabs displayed on the user webpages. Typically, these 
reports are sent first to the website itself, so that website 
employees can review the reports and take appropriate action, 
including terminating the account of a user who has violated 
the terms and conditions of the website. If the content 
contained apparent images of child pornography or grooming, 
each website stated that they report this activity to 
NCMEC.\20\
---------------------------------------------------------------------------
    \20\ NCMEC is the designated repository in the United States of all 
reports of online grooming or child sexual abuse or exploitation, and 
their link is displayed on several websites in order for users to 
report abuse. Once a report is received by NCMEC, analysts are 
available 24 hours a day to review the report and forward it to the 
appropriate law enforcement agency. Other countries have adopted 
similar approaches. For example, in the United Kingdom and Australia, 
many websites display a link to the Virtual Global Taskforce, or VGT. 
The VGT is comprised of law enforcement agents from Australia, the 
U.K., Canada, and the U.S., where agents from ICE are members. Internet 
users can report grooming or online sexual abuse by clicking on the VGT 
button, or link, displayed on social networking websites or the VGT's 
website, www.virtualglobaltaskforce.com. The link then takes the user 
to a reporting page, where he or she is asked to supply certain 
information such as the webpage where the abuse occurred. The report is 
then immediately sent to the appropriate country for immediate review 
and action by law enforcement.
---------------------------------------------------------------------------
    The social networking websites also conduct some human and 
automated review of the content on their webpages, however, 
more needs to be done to ensure that these reviews are as 
effective and aggressive as they can be. For example, at the 
June hearing, the social networking websites, particularly, 
MySpace, were asked if they screened their sites for registered 
sex offenders. At that time, none of the social networking 
websites conducted any type of screening for sex offenders on 
their websites. Now, almost six months later, MySpace announced 
on December 5, 2006 that it was working to develop a technology 
that will allow it to block convicted sex offenders from 
accessing MySpace. As the technology has yet to be implemented, 
its effectiveness remains uncertain. Even so, it seems that the 
websites primarily rely on their users to ferret out and bring 
inappropriate content to their attention. As Facebook 
testified, they believe user reporting works best because 
Facebook users are best able to recognize individuals who do 
not belong in their school communities and do not tolerate 
behavior or content that does not meet the community's 
standards. While Facebook is unique in that its users webpages 
are organized according to high school, college, or regional 
communities and only available to other users within the same 
community, Xanga also found that its reporting or ``flagging'' 
system has proved reliable in identifying child pornography or 
other inappropriate content.
    Despite these safeguards, children's webpages on social 
networking websites are still vulnerable to child predators as 
the success of the safeguards largely depends on a child's 
ability to recognize a dangerous situation, and report it, or 
to affirmatively activate the safeguards and privacy settings. 
The search functions of a website also pose a risk to 
children's safety online. While Xanga and Facebook do not 
permit its members to search other member's webpages for 
personal characteristics, such as height, sex, or interests, 
MySpace users can search member profiles for a variety of 
factors including sex, age, marital status, body type, and 
interests. Though the webpages of MySpace users who are under 
age 16 have a default privacy setting and, even if that setting 
is deactivated, they are available only to other users under 
the age of 18, child users are still at some risk because the 
system can easily be manipulated by users who lie about their 
age.\21\ It takes only minutes to search for and find children 
who are under 16 years old on MySpace. For example, Committee 
staff did a search on MySpace for persons 4,11" or shorter. 
This simple search uncovered numerous underage users who 
accurately stated their height in their profile, but who over-
reported their age, a common tactic by underage users to evade 
the MySpace age restrictions.
---------------------------------------------------------------------------
    \21\ MySpace does not permit users who are under the age of 18 
years old to specifically browse for users who are 16 years old or 
younger. In addition, adults can never browse for users who are 18 
years old or under.
---------------------------------------------------------------------------
    Although all the social networking sites testified that 
they have been unable to develop a viable age verification 
system to weed out underage users, it appears that with some 
basic search techniques and development of more refined search 
algorithms, these companies should be able to detect underage 
users and those violating their Terms of Use in a more 
effective fashion. The lack of effective methods for protecting 
the adolescent membership of these websites, or limiting the 
websites to adults only, necessarily means that children are 
placed at risk of exposure to child predators. Social 
networking websites could require a verifiable credit card in 
order to confirm the age of the user, however, credit card 
companies have resisted allowing their systems and databases to 
be used for such confirmation without a purchase first taking 
place.
    In addition, children often are not able to accurately 
assess the risk presented by revealing personal information and 
communicating with individuals they meet in an online 
community. Detective Frank Dannahey of the Rocky Hill, 
Connecticut Police Department testified at the Subcommittee's 
June 28 hearing that children's personal information was often 
easily available or readily volunteered on the MySpace webpages 
he reviewed while conducting an experiment on Internet safety. 
This personal information included where the child lived, 
worked, the child's full name and date of birth, and cellular 
and home telephone numbers. According to Detective Dannahey, 
teenaged users of social networking websites are often very 
trusting of the people they meet online and do not perceive 
them as strangers but as friends. For this reason, teenagers 
are not able to recognize when they are sharing personal 
information that might identify them to a child predator. These 
characteristics necessarily undermine safeguard systems that 
depend on a child's ability to recognize and report 
inappropriate content.
    The risk posed to children by predators who are intent on 
communicating with them and befriending them online demands 
that Internet Service Providers and social networking websites 
take an aggressive approach in developing safeguards to protect 
children. Already, since Committee staff began meeting with the 
ISPs and social networking websites early in 2006, these 
companies have implemented several improvements to their 
systems. For example, when Committee staff first met with 
Comcast, its data retention period for a customer's IP address 
assignments was 30 days. Just prior to the June hearing, 
Comcast announced that it was increasing this data retention 
period to six months beginning in September 2006. AOL, Yahoo!, 
Microsoft, and Earthlink announced that they were joining 
together to create the Technology Coalition at NCMEC, the 
purpose of which is to establish a central clearinghouse of 
known images of child pornography and to develop technology 
solutions to combat online child pornography. Also, in response 
to staff concerns, Google strengthened its advertising policies 
to ensure that it was not accepting advertising from companies 
with links to websites that promote the sexual exploitation of 
children. Finally, as mentioned previously, MySpace recently 
announced that it will build a sex offender database in order 
to screen its site for users who are also registered sex 
offenders.
    Following the June hearings, Committee staff traveled to 
the Netherlands and Belgium in order to meet with Dutch and 
European Union officials to discuss their progress in 
implementing a European Union data retention directive. The 
directive, which was issued on March 15, 2006, is broader than 
the policies discussed by the Internet Service Providers who 
testified at the Subcommittee's June hearing because it applies 
not only to data that links an IP address to a particular 
individual, but to network and cellular telephones including 
the records of telephone numbers called and the date and time 
of Internet access. Pursuant to the directive, European Union 
member countries must adopt a data retention policy of at least 
six months and no more than two years for the data covered by 
the directive. Committee staff discussed with European Union 
and Dutch officials the response of the European Member 
countries to the directive; the reaction of the Internet 
Service Provider industry; technical issues posed by the 
directive; and cost projections for implementing the 
initiative. According to the directive, Member countries must 
have approved implementing legislation for Internet Service 
Providers data retention by March 15, 2009. Therefore, any U.S. 
ISP that is also doing business in an E.U. member country will 
need to comply with this legislation. Notably, no ISPs were 
able to provide the E.U. with substantive cost estimates for 
implementing the data retention legislation.\22\
---------------------------------------------------------------------------
    \22\ Member countries are handling the legislation in different 
ways; the U.K. has opted to pay for the cost of retention and storage 
up to an agreed upon amount.
---------------------------------------------------------------------------

C. The Role of the Financial Services Industry in Combating the Sexual 
        Exploitation of Children Over the Internet

    On September 21, 2006, the Subcommittee held a hearing 
entitled ``Deleting Commercial Child Pornography Sites from the 
Internet: The U.S. Financial Industry's Efforts to Combat this 
Problem'' that focused on the efforts of the financial industry 
to prevent commercial child pornography businesses and 
purchasers of child pornography from using their payment 
systems. The purpose of the hearing was two-fold. First, the 
Subcommittee hoped to learn how credit card companies and the 
banks that are members of their systems, known as merchant or 
acquiring banks, attempt to prevent commercial child 
pornography businesses from using their payment networks to 
facilitate the sale and distribution of child pornography 
images. In addition, the Subcommittee was interested in the 
efforts of the National Center on Missing and Exploited 
Children to create the Financial Coalition Against Child 
Pornography at NCMEC, or ``Financial Coalition,'' and how it 
intended to achieve its stated goal of eradicating commercial 
child pornography over the Internet by 2008.
    The first panel of witnesses focused on how law enforcement 
agents investigate online commercial child pornography 
businesses and the difficulties presented in these 
investigations. The witnesses on this panel included Mr. 
Christopher Christie, United States Attorney for the District 
of New Jersey, Mr. James Plitt, Director of the Cyber Crimes 
Center at U.S. Immigration and Customs Enforcement (``ICE''), 
U.S. Department of Homeland Security, and Mr. Ernie Allen, 
President and C.E.O. of NCMEC. Both Mr. Christie's and Mr. 
Plitt's testimony focused on the RegPay investigation. RegPay, 
also known as Operation Falcon, was the first international 
commercial child pornography website ring to be investigated 
and prosecuted in the United States. Mr. Christie, whose office 
extradited and prosecuted the defendants in the U.S., and Mr. 
Plitt, whose department was the lead law enforcement agency, 
explained how a company in the former Soviet republic of 
Belarus, called ``RegPay,'' operated several commercial child 
pornography websites as well as processed payments for over 50 
other child pornography websites. The Belarus firm used a U.S.-
based credit card processing company, called Connections USA, 
to process the monthly payments for access to the websites 
containing images of child pornography. United States Attorney 
Christie described how his office worked cooperatively with 
federal, local and international law enforcement to prosecute 
the persons in Belarus operating the websites. Ultimately, the 
investigation led to the arrest of over 300 persons in the 
United States that purchased child pornography from this 
website and over 1,400 arrests worldwide. The two defendants 
from Belarus involved in the RegPay case were extradited to the 
United States, pled guilty on the eve of trial and were 
sentenced in August 2006 to 25 years in prison and a fine of 
$25,000 each. Also, $1.15 million was seized as part of their 
illegal business operations that sexually exploited children.
    In addition to using the RegPay case as a model for future 
investigations, United States Attorney Christie, Mr. Plitt, and 
Mr. Allen noted that the payment methods used by commercial 
child pornography businesses are evolving. Specifically, law 
enforcement agents have witnessed the rapid growth of anonymous 
forms of payment to purchase child pornography images over the 
Internet. These forms of payment include digital currencies. 
Typically, digital currency is created when an Internet user 
makes a deposit to an account either from a bank account using 
an electronic funds transfer or by credit card. The digital 
currency account is then used to make purchases on the 
Internet. According to Mr. Plitt, digital currencies often make 
it difficult for law enforcement agents to identify and track 
the global financial structure that facilitates Internet child 
exploitation. As Committee staff has learned during the course 
of its investigation, this is because some digital currency 
companies do not request information relating to the identity 
of the account holder or they do not attempt verify it.
    In his testimony, Mr. Allen also addressed the work of 
NCMEC's Financial Coalition. The primary purpose of the 
Financial Coalition, as Mr. Allen described it, is to ``follow 
the money, stop the payments, shut down the account, and put an 
end to this multi-billion dollar enterprise.'' The principal 
obstacle to shutting down the websites that sell sexually 
exploitative images of children is identifying the merchant 
that is processing payments for those images. In order to shut 
down the merchant's website and prevent it from processing 
payments, law enforcement agents must first identify the 
merchant bank or acquiring bank that actually approved a 
merchant for participation in the credit card networks. 
Usually, the credit card companies, like VISA, MasterCard, and 
American Express, do not have control over the website or a 
direct relationship with the merchant that is selling the 
illegal material. Therefore, it is impossible for the credit 
card companies themselves to immediately terminate the child 
pornography websites that are purportedly accepting their 
credit cards for payment. The role of the Financial Coalition 
is to assist in quickly identifying the merchant or acquiring 
banks that process payments for the commercial child 
pornography businesses, and facilitate the transmission of that 
information to law enforcement. To do so, NCMEC and the 
Financial Coalition launched a pilot ``Clearinghouse'' in the 
summer of 2006 to facilitate better and faster communication 
between the financial industry and law enforcement, when a 
commercial child pornography site is identified. The methods 
which the Financial Coalition are using to detect and track 
down the merchant associated with the particular commercial 
child pornography site, however, are confidential and cannot be 
discussed in detail in this report. As of the hearing, Mr. 
Allen stated that 87 percent of the United States payments 
industry, as measured in dollars running through the payments 
system, has joined the Financial Coalition.
    Mr. Allen also described another new initiative being 
undertaken by NCMEC to combat online child pornography. 
According to Mr. Allen, based on the Committee's suggestion, 
NCMEC is working with several U.S.-based Internet Service 
Providers to develop a proactive program for terminating 
websites that contain images of child pornography. Under this 
program, a NCMEC analyst will first identify the websites that 
contain images of child pornography. The addresses of those 
websites will then be forwarded to federal and state law 
enforcement agents so that they can initiate an investigation, 
if appropriate. After law enforcement is notified, NCMEC will 
then forward the websites' addresses to the Internet Service 
Providers who are registered with and reporting to NCMEC and 
request that they enforce their terms of service, which 
prohibit illegal content. These ISPs have agreed to terminate 
the website upon such notice and use filters to block access 
through their systems to those websites. This is an important 
step toward implementing a system that will block Internet 
subscribers' attempts to access websites containing child 
pornography images. We remain concerned, however, that, this 
initiative may not have the support of all U.S. ISPs. While 
many major ISPs in the United States are interested in the 
initiative, hundreds of others are not even registered with or 
reporting into the Cybertipline and their support for this 
initiative is unclear.
    The second panel was comprised of witnesses from the credit 
card associations, including American Express, MasterCard, and 
VISA, and other payment companies, including e-Gold and PayPal. 
The purpose of this panel was to examine the payments 
industry's efforts to prevent individuals from using their 
systems to process child pornography transactions. Although 
MasterCard and VISA do not sign up merchants or card holders 
directly--this is the responsibility of their member banks, 
known as merchant banks--they do set the policies and 
conditions their merchant banks must follow for approving a 
merchant.\23\ In addition to determining the categories of 
business in which their merchants may engage, MasterCard and 
VISA dictate the procedures and guidelines the merchant banks 
must follow with regard to screening prospective merchant 
accounts both before and after they begin processing payments 
as well as closely monitor the merchant banks' credit policies. 
As MasterCard, VISA and American Express explained in their 
testimony, their standards for approving Internet merchants are 
stricter than for ``brick and mortar'' merchants because 
Internet merchants inherently present a greater risk.
---------------------------------------------------------------------------
    \23\ American Express operates differently from MasterCard and VISA 
in that American Express itself both issues credit cards to its credit 
card holders and acquires, or approves, the merchants who can accept 
American Express. In addition, the companies' policies differ with 
regard to the categories of business they will accept. American Express 
has a blanket prohibition against signing up merchants involved in the 
adult pornography industry. Companies such as MasterCard and Visa have 
terms within the bylaws of their association agreements that may 
prohibit certain adult content. Some acquiring banks may have an 
expanded definition of prohibited businesses that goes beyond what the 
credit card association rules prohibit.
---------------------------------------------------------------------------
    In addition to adopting standards intended to identify 
potential or approved merchants who engage in illegal activity, 
such as commercial child pornography, American Express, VISA, 
and MasterCard also have implemented, with varying degrees of 
success, proactive measures to ensure that their Internet 
merchants are not selling or dealing in child pornography. The 
principal proactive measures adopted by these companies is 
``spidering,'' or crawling the web, in order to identify 
websites that claim to accept American Express, MasterCard, or 
Visa and are participating in illegal activity or are violating 
the intellectual property rights of the companies by purporting 
to accept credit cards in an effort to make the website look 
legitimate. Once the credit card association determines that 
the website accepts their credit cards and is engaged in child 
pornography, the credit card association may shut down the 
merchant's account or fine the merchant. In addition, the 
credit card companies report the website to NCMEC or, in some 
cases, directly to law enforcement, or both.
    Interestingly, the credit card associations explained in 
their testimony and in meetings with Committee staff that they 
have discovered relatively few instances where merchants were 
participating in a commercial child pornography business. They 
maintain that the majority of child pornography websites that 
claim to accept major credit cards, such as American Express, 
MasterCard, or Visa, in fact do not. Instead, when a child 
pornography purchaser clicks on the payment link, the website 
will lead the purchaser to other payment methods. According to 
the credit card associations, their strict policies and 
procedures for approving merchants are successful in screening 
out merchants who intend to engage in this illegal activity.
    Like the credit card associations, PayPal and e-Gold, which 
are alternative payment mechanisms or digital currencies, have 
also adopted policies and procedures that prohibit their users 
from using their account to purchase child pornography. PayPal, 
a subsidiary of eBay, has taken steps to identify and minimize 
the use of its services for illegal transactions. For example, 
PayPal's policies state that its users may not use their 
accounts to purchase ``any obscene or sexually oriented goods 
or services.'' While their policies prohibit the purchase of 
child pornography, the critical issue with digital currencies 
with respect to commercial child pornography is the anonymity 
it offers its users. PayPal testified, however, that its system 
provides accountability and traceability because each 
individual user is required to provide his or her name, full 
address as it appears on the financial instrument funding the 
account, and home telephone number. Similarly, business users 
are required to provide information about their business, the 
name of the business owner, and work telephone and address 
information. PayPal then verifies this information against 
external and internal databases. Also, PayPal, like the credit 
card associations, performs some due diligence on its merchants 
as well as ongoing fraud and credit review after the merchant 
is approved to accept PayPal.
    While e-Gold is also a digital currency, it operates 
differently from PayPal in that its accounts are purportedly 
backed by actual gold reserves. To establish an account, an 
individual completes a short form online, including some 
identifying information. However, e-Gold does not verify this 
identification information or require that a credit card or 
other financial instrument be presented to verify identity. 
Further, e-Gold does not maintain sufficient records reflecting 
the activity of e-Gold accounts or, unlike credit card 
associations and merchant banks, conduct any due diligence on 
the merchants that accept e-gold.
    The Subcommittee's investigation into the use of financial 
instruments to purchase child pornography over the Internet 
revealed a much larger problem touching upon the burgeoning 
industry of digital currencies: the lack of regulation of 
digital currencies by any government entity, domestic or 
foreign. Digital currencies that do business in the U.S. are 
not subject to any of the U.S. banking requirements. This has 
created a dangerous loophole in commercial transactions 
occurring on the Internet with virtually no accountability. It 
is imperative that the U.S. and other countries address the 
rise of digital currency and begin to subject this industry to 
some form of oversight and regulatory consistency. As of now, 
operations such as e-Gold are available to individuals who wish 
to transfer money anonymously for any purpose, whether legal or 
illegal.
    The third panel focused on the efforts of acquiring banks 
or merchant processing companies to prevent commercial child 
pornography merchants from having access to a traditional 
method of online payment, such as a credit card, to offer on 
their site. The witnesses included Chase Paymentech and Bank of 
America, which are both acquiring banks, and NOVA and First 
Data, which are merchant processors.\24\ As the witnesses 
explained at the hearing, before an acquiring bank or merchant 
processor can conduct merchant processing, that merchant must 
first be approved by the bank. The acquiring bank or processing 
company will first determine whether the merchant's business is 
consistent with its credit policies, as well as the 
association's policies. Bank of America, First Data 
Corporation, and NOVA each testified that their credit policies 
forbid them from approving any merchant who engages in certain 
types of businesses, including any illegal activity, such as 
child pornography, as well as certain legal activity, such as 
adult pornography.
---------------------------------------------------------------------------
    \24\ First Data and NOVA are not banks; various acquiring banks may 
contract out certain of their merchant banking functions, such as 
performing due diligence on prospective merchants and other functions, 
to these companies. Therefore, given the large size of their portfolio 
of merchant banks, much of the due diligence on the merchant side is 
frequently done by merchant processing companies like First Data or 
NOVA
---------------------------------------------------------------------------
    After the merchant bank concludes that the merchant's 
business is consistent with its credit policies and the credit 
card association's policies, the merchant bank will then 
conduct an underwriting and risk review. Most institutions 
conduct a more rigorous review of Internet merchants, as 
opposed to brick and mortar merchants, because Internet 
merchants are a greater credit risk. For example, Bank of 
America and Chase review each page of a prospective Internet 
merchant's website to determine that the links on the site are 
operational, that they do not link to illegal or prohibited 
content, and that the merchant has appropriate customer service 
and product information. Once a merchant has been approved, the 
acquiring banks or processors then conduct varying levels of 
ongoing review to ensure that the merchant does not begin to 
offer banned products or services, such as adult content or 
child pornography. According to the witnesses, this review is 
primarily automated and involves monitoring trends in sales 
volume and average sales ticket size in order to identify 
patterns that may indicate illegal activity. If unusual 
activity is noted, the acquirer will conduct a more extensive 
review of the merchant's business. In addition, some acquirers, 
like Bank of America, attempt to visit the websites of Internet 
merchants at least one time a year, even if abnormal activity 
is not present; other acquirers, such as First Data, will 
revisit a merchant's website only if certain risk factors are 
triggered during its ongoing review. Finally, MasterCard and 
American Express acquiring banks are required to check the 
prospective merchant information against a database known as 
the MATCH system, which houses information about terminated 
merchants.
    In addition to ongoing monitoring of merchants, the 
merchant banks or processors also take additional proactive 
steps to identify merchants engaged in commercial child 
pornography. NOVA Information Systems uses a web crawler to 
search for certain search terms that may suggest a site 
contains child pornography. However, not all merchant banks or 
processors do so, contending it is unnecessary because the card 
associations already use web crawling services and inform their 
merchant banks when the crawlers find child pornography. Like 
the credit card associations, the merchant and acquiring banks 
identified only a handful of merchants engaged in commercial 
child pornography in a given year. Typically, according to the 
banks, when the merchant applied for an account, its business 
and its website appeared to be legitimate; however, sometime 
after obtaining an account, the merchant then began to engage 
in commercial child pornography. The witnesses believe that the 
number of child pornography businesses they identify is minimal 
because their credit policies prohibit all pornography, even 
adult pornography, and their credit and underwriting review is 
successful in identifying risk factors that are linked to 
illegal activity.
    There is an obvious discrepancy between the number of 
websites that engage in commercial child pornography--
approximately 100,000 or more as estimated by the FBI--and the 
number of child pornography merchants identified by mainstream 
credit card companies. This discrepancy may be attributable to 
several factors, including the popularity of alternative 
payment methods, such as digital currencies; the use of barter, 
such as providing new images of child pornography to ``pay'' 
for child pornography received from a website; and the fact 
that commercial child pornography websites are skilled at 
masking the true nature of their business.

D. The Psychology of Pedophiles and Child Predators

    On September 26, 2006, the Subcommittee convened a hearing 
dedicated to exploring the psychology of pedophiles and child 
predators as well as how the commercial child pornography 
industry is evolving over the Internet.
    The first panel of witnesses addressed the psychology and 
behavior of child predators. The witnesses included Dr. Anna C. 
Salter, a clinical psychologist in Madison, Wisconsin who 
treats and studies sex offenders; Dr. Andres C. Hernandez, 
Director of the Bureau of Prisons' Sex Offender Treatment 
Program at the Federal Correction Institution at Butner, NC; 
and Dr. Philip Jenkins, a Professor of Religious Studies and 
History at Pennsylvania State University who wrote a book in 
2001 entitled Beyond Tolerance: Child Pornography on the 
Internet which described what he observed after joining 
pedophile forums on the Internet and observing pedophiles' 
conversations.
    The New York Times reporter Kurt Eichenwald also joined the 
panel to discuss his two recent articles published on August 20 
and August 21, 2006, entitled ``With Child Sex Sites on the 
Run, Nearly Nude Photos Hit the Web'' and ``From Their Own 
Online World, Pedophiles Extend Their Reach,'' respectively. 
The first article discussed websites commonly referred to as 
``child modeling websites,'' where young girls are posed 
provocatively in sexual clothing. According to Mr. Eichenwald's 
investigation, the owners and operators of these websites have 
deliberately posed the girls in clothing because they believe 
that the current definition of ``child pornography'' requires 
the genitalia to be somehow visible in order for the images to 
be illegal. The second article focused on the online forums and 
chatrooms visited by pedophiles and child predators, where Mr. 
Eichenwald observed child predators encouraging one another and 
rationalizing their behavior.
    Dr. Hernandez's testimony focused on the treatment of sex 
offenders within the Bureau of Prisons (``BOP''). Dr. Hernandez 
runs the BOP's only Sex Offender Treatment Program. Currently, 
that treatment program can only house 112 inmates at a time, 
out of the almost 12,000 federal prisoners now incarcerated for 
sexual crimes. The program is wholly voluntary for offenders. 
The treatment program lasts 18 months and is conducted in seven 
phases; these phases include a complete psychiatric evaluation 
and group and individual therapy. The final phase includes a 
polygraph. During the polygraph, inmates are questioned about 
whether they have committed contact offenses for which they 
have not been arrested or convicted. The information provided 
during the polygraph was the basis for a presentation Dr. 
Hernandez gave in 2000 entitled ``Self-Reported Contacted 
Sexual Offenses by Participants in the Federal Bureau of 
Prisons' Sex Offender Treatment Program: Implications for 
Internet Sex Offenders.'' With regard to the inmates he had 
treated, Dr. Hernandez found that 76 percent of the inmates 
convicted on charges related to the possession of child 
pornography or luring a child had also committed sexual contact 
offenses against children. Dr. Hernandez believed that this 
finding suggested that the majority of sex offenders convicted 
of Internet sex crimes had ``similar behavioral characteristics 
as many child molesters.''
    In her testimony, Dr. Salter confirmed that a 
``considerable percentage'' of individuals convicted for child 
pornography crimes had also committed contact offenses. More 
disturbingly, in her testimony, Dr. Salter's suggested that 
this number may be underestimated, as one report found that 
only three percent of individuals who have committed contact 
offenses are caught. In addition to finding a link between 
possessing child pornography and committing contact offenses, 
Dr. Salter also testified that she believes there is a link 
between viewing online pornography and committing contact 
offenses. With regard to reducing the number of contact 
offenses against children, both Dr. Jenkins and Dr. Salter 
testified that reducing online child pornography would also 
reduce contact crimes, especially among those offenders who are 
emboldened to act on their sexual desires or urges by viewing 
child pornography. According to Dr. Salter, ``child pornography 
increases the arousal to kids and is throwing gasoline on the 
fire.''
    As Dr. Salter acknowledged, while recidivism is common 
among sex offenders, treatment can be successful in reducing 
it. One report cited by Dr. Salter found that recidivism among 
sex offenders can be reduced by as much as 40 percent with 
proper treatment. Dr. Salter and Dr. Hernandez agreed that 
cognitive behavioral therapy or treatment was most effective in 
treating sex offenders; however, Dr. Salter testified that many 
states do not have the resources to provide the treatment that 
might decrease recidivism and, in fact, that some states have 
waiting lists for treatment.
    Mr. Eichenwald's testimony focused on the online pedophile 
community. Mr. Eichenwald described the online pedophile 
community as being very sophisticated and cunning. For example, 
Mr. Eichenwald testified that there are Internet podcasts and 
even an Internet radio station organized by pedophiles for 
adults who are attracted to children. During the four months 
Mr. Eichenwald spent examining pedophile forums and chatrooms, 
he observed pedophiles discussing the best ways to get access 
to children, including serving as camp counselors, foster care 
parents, and other community events where children gather, and 
rationalizing their behavior. For example, some of the 
pedophiles Mr. Eichenwald observed believe their relationships 
with minors are consensual and that the child, in fact, 
instigated the relationship. In fact, Mr. Eichenwald found that 
some pedophiles see themselves as leaders of a ``cause'' to 
advance the rights of children to have sex with adults. The 
pedophiles Mr. Eichenwald observed also rationalize their 
behavior in other ways, arguing that adults who attempt to 
protect children from them are ``child haters'' and impeding 
children's happiness.
    Perhaps even more disturbing is the physical proximity to 
children the pedophiles observed by Mr. Eichenwald online 
seemed to enjoy. Mr. Eichenwald testified that the pedophile 
conversations he observed included daily accounts of their 
observations of children. Many of the people who visited the 
forums were teachers and school administrators, pediatricians, 
and other individuals with access to children.
    The second panel of witnesses focused on the role of web 
hosting companies. The witnesses included Mr. Thomas Krwawecz, 
the C.E.O. and President of Blue Gravity Communications, Inc., 
and Ms. Christine Jones of GoDaddy.com. Blue Gravity is a 
relatively small web hosting business located in Pennsauken, 
N.J., with servers located in Philadelphia, PA; GoDaddy.com is 
the number one registrar of domain names in the world and is 
also a large web hosting company. Web hosting companies provide 
the connection to the Internet for website operators and own 
the servers where websites upload their content. Mr. Krwawecz 
and Ms. Jones discussed how their companies identify possible 
child pornography or child modeling websites either when those 
websites register their domain names or during the hosting 
process.
    As Ms. Jones described, the first step in creating the 
website is registering, and therefore reserving, the domain 
name. At GoDaddy.com, the domain registration process is 
entirely automated. Ms. Jones testified that it would be very 
difficult to prevent an online child pornography or child 
modeling website from registering for a domain name because it 
is difficult, if not impossible, to verify the legitimate use 
of the domain name even if the name suggests it may be a child 
pornography website.
    According to the witnesses, once a website name is 
registered and a web hosting company begins hosting content, it 
is still difficult for the web hosting company to search 
proactively the websites it hosts in order to uncover child 
pornography content. Mr. Krwawecz testified that, in his 
experience, employing a web crawler service that uses certain 
terms found on child pornography websites would be impractical 
because the search would turn up thousands of results, most of 
which do not contain child pornography content. As mentioned 
previously, financial services companies do employ web crawlers 
as well as conduct other searches in order to identify 
inappropriate content.
    Ms. Jones and Mr. Krwawecz also explained that they 
typically learn that websites they host contain inappropriate 
content through reports or complaints from outside parties. 
Once a report is made, Ms. Jones testified that GoDaddy.com 
initiates an investigation to determine if the website contains 
child pornography or child modeling and immediately suspends 
and reports websites that contain child pornography content. 
With regard to child modeling websites, Ms. Jones stated that 
GoDaddy.com routinely suspends websites that show images of 
children posed in a manner intended to be ``explicitly sexy''; 
posed in adult lingerie; or children who are partially nude or 
in very little clothing ``not associated with normally 
acceptable situations.'' Similarly, Mr. Krwawecz stated that it 
is the policy of his company to investigate the reports it 
receives and to disable the accounts of websites that contain 
``blatant illegal content.'' However, with regard to potential 
child modeling websites, Mr. Krwawecz states that his company 
requests proof of age for the models from the website, and if 
``satisfactory proof'' cannot be provided, the website is 
terminated. Although websites hosted by Mr. Krwawecz's company 
included sexually solicitous posing of children who appeared as 
young as 8 or 9 years old, there is no evidence that Mr. 
Krwawecz was aware of this content and, once notified of the 
websites prior to the hearing, immediately terminated them.
    As noted earlier, web hosting companies, domain registries, 
credit card companies, social networking sites, and cellular 
telephone carriers, are not clearly subject to the reporting 
requirements of 42 U.S.C. Sec. 13032 or other provisions. While 
certain financial services companies have taken a proactive 
approach to working with NCMEC on the problem of commercial 
child pornography websites, and in reporting into the 
CyberTipline without a legal obligation to do so, not all firms 
that profit from these websites have followed suit. More 
importantly, many industries do not even know about the 
CyberTipline or whether they can, should, or must report into 
the CyberTipline. For example, due to the urging of NCMEC and a 
question posed by the Subcommittee at the June 28th hearing, in 
August 2006, the FCC issued an advisory opinion that cellular 
telephone carriers would not be precluded by other statutory 
requirements from complying with the reporting requirements of 
42 U.S.C. Sec. 13032.
    Without any mechanism by which to track the number of 
Internet Service Providers, web hosting companies or domain 
registries in the U.S., it is also difficult to give notice to 
these entities of their statutory obligations, the existence of 
the CyberTipline, NCMEC, and the VGT, as well as the 
development of best practices. Clearly, neither current legal 
requirements nor voluntary action have been apparently 
sufficient to put a significant dent in the problem of sexual 
exploitation of children over the Internet.

                                  
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