Focus: Closing the net
Times Online - Sunday Times
Credit-card providers face growing pressure to disavow profits made from online porn, says John Burns
In September 1999, the FBI raided the home of Thomas and Janice Reedy in Fort Worth, Texas. Inside they found the largest child pornography business ever, one which had 250,000 subscribers, including 100 in Ireland.
Operating as Landslide Productions, the Reedys were earning up to $1.4m (€1.2m) a month selling child porn images over the internet. For a monthly fee of about $30, the likes of Tim Allen, the celebrity chef from Cork, could access websites with titles such as Child Rape containing images of four-year-olds being sexually abused.
Many of the paedophiles used credit cards to pay for the images, and that was how they were caught.
Professor Max Taylor from Copine, a child-porn research unit in Cork, reckons that credit-card companies made up to $3m a year from Landslide’s tawdry trade, based on their 4% to 6% commission on each transaction.
“There is a social problem here — pornography — and people are benefiting from it,” says Taylor. “Barclaycard made a profit of £3.8 billion (€5.7 billion) last year, and American Express made $6 billion. It is not unreasonable to say that a fraction of that may come from what people would see as being unsavoury if not illegal.”
Credit-card companies are coming under increasing pressure to disavow this money. While it is difficult for consumers who object to pornography to have a direct impact on those who produce it — they are already boycotting the “product” — they are now realising they can influence banks that enable its finance.
“If companies have been identified as having links with the pornography industry, then people should act by taking their business elsewhere,” says Joanna McMinn, director of the National Women’s Council.
This threat will be taken more seriously by Irish financial institutions after a campaign by the women’s group shamed Bank of Ireland two weeks ago into promising to get out of a deal with a UK pornography magazine firm.
The bank had offered a €7m loan to Remnant Media to purchase 45 top-shelf titles, such as Asian Babes, from Richard Desmond, joint owner of the Irish Star with Independent News & Media, and owner of Express Newspapers in Britian. The women’s council urged members to close their Bank of Ireland accounts in protest. Surprisingly, it worked.
“It was customer comment that swayed our decision,” admitted a bank official. “We didn’t lose any business but we did move quickly in response to the threat.”
The women’s council is understandably chuffed. Now it has identified this new target — the link between credit-card companies and pornographic websites. “Women have moved into the labour market and a lot more of them have credit cards. They should use them to have an influence. It is easy to change credit card,” says McMinn.
But can it score a second success, and do Irish banks even have a case to answer?
THE business of EuroConex, a company based in Arklow, Co Wicklow, is to check out businesses that want to receive payments by Visa, Mastercard, American Express, Diner’s Club, Laser in Ireland and Switch in Britain. It considers new clients from a credit and an ethical point of view.
“Three types of businesses are prohibited,” says Willie Byrne, head of sales and marketing. “Adult entertainment, child pornography, and sexual-encounter firms such as escort agencies. We will not sign up any of these people.”
Of course, websites that plan to sell pornography do not show up at the bank with names like MegaBoobs.com. Some present themselves as sellers of lingerie or even more innocuous products.
“As part of our signing-up process, we do a full review of the website addresses to make sure it is a legitimate e-commerce business, and we also look at associated sites and links,” says Byrne.
In the Irish market, this is a relatively straightforward procedure and involves tens of applications per week rather than hundreds. EuroConex has a staff of about 15 involved in processing applications from merchants, and checking out websites is just a part of their duties.
“Occasionally something slips through the net,” says Byrne. “Big business is involved in these pornographic sites and they tend to be resourceful. It’s a bit like fraudsters. Even the most scrupulous acquirers will be compromised from time to time.
“This hasn’t happened to EuroConex, but if we did find a site with adult pornography we would disable it on our system. If we found something illegal, we would report it to gardai.”
The Irish Payment Services Organisation, which represents banks who issue credit cards in Ireland, says none of them knowingly process transactions for any porn sites. AIB’s credit-card centre, for example, says it has an unambiguous policy in relation to applications from merchants involved in trading in pornography: “We do not accept business from such companies.”
Visa says it employs a company, Intercap, to scan the web looking for child porn websites that use the Visa sign. Any they find are reported to police.
There is a key distinction to be drawn here. Every right-thinking person would approve of credit-card firms doing all they can to eradicate child porn. But adult porn is a much more difficult ethical issue simply because, as Visa notes, it is legal.
“We have 21,000 member banks from very different parts of the world and there are some very different views on that sort of thing (adult porn),” says a Visa spokesman. “If something is legal, that’s as far as we can go.
“Visa is owned by banks — those are our customers. The card-holders are customers of the banks, so if people want to put pressure on the banks, that’s fine.”
One thing the banks say they will not do is to snoop in customers’ accounts to check who is making payments to MegaBoobs and the like.
“We are not doing Big Brother,” said a Bank of Ireland official. “There are so many millions of transactions anyway.”
Most websites that use credit-card facilities erase the details of each transaction once it’s completed anyway, points out Evan Ryder, a computer services technologist with University College Galway. The Data Protection Act in Ireland stipulates that such details cannot be retained by credit-card companies.
“I don’t think companies like Visa will do much more, because the only extra action they could take if a card-holder attempted to purchase pornography online would be to report the card number or refuse to complete the transaction,” says Ryder. “Both approaches are probably illegal in some countries and would involve expensive changes to the credit-card company’s or bank’s systems. It would also require a database of blacklisted businesses to be maintained continuously.”
But this is the extra mile Taylor feels credit-card companies should travel. “I don’t know how to solve it technically, but they have a responsibility to solve it,” he insists.
Credit-card providers have no difficulty telling their customers they have exceeded their credit limit, no matter what part of the world they may be in, argues Taylor, so why can’t they stop porn sites using plastic to sell smut? “Commercial companies that make money out of pornography have a responsibility to society, and I don’t think it’s enough for them to say, ‘We’re doing all we can’. I want them to look at re-designing their systems so that they can clearly identify website owners that carry porn, and stop money going to them.”
Some in the banking industry privately admit they sympathise with this argument. “There are credit-card companies that take a very commercial view and say to themselves, ‘These porn sites will find an acquirer somewhere, so it may as well be us’,” said one industry source.
“In Britain, there are mainstream adult websites with top-shelf magazine stuff. Companies like Barclays and Royal Bank of Scotland are acquirers for these sites.”
The very least such companies could do, says Taylor, is make a donation to charity equivalent to the profits they make from the sale of sex images. “If they agree that porn is reprehensible, how about giving Women’s Aid $2m a year?” he wonders.
Without a credit line, a lot of internet porn would be out of business. Those operating child-porn sites are not, Taylor believes, sexually interested in children. They are usually criminals and in it for the money. “If you shut down the money, you shut down the sites,” he says. “They would go and do something else.”
He doubts that any Irish financial institution is knowingly involved in anything inappropriate, but feels that the Bank of Ireland case could be a watershed of sorts.
“What was important was that people expressed their view and the bank listened,” he says. “Big organisations only think about these things when it hits their pockets.
“There was a sadder side to that case too, though. It showed that there is a very well-organised women’s voice; but there’s no organised children’s voice.”
ACTUALLY, Copine is that voice. The team of six, based at University College Cork and led by Taylor, is the only child porn research group in the world. Its budget, of almost €200,000 a year, comes mostly from the European Union. Success for Copine is when, like last week, a paedophile they detect posting children’s images on the net in America is arrested.
Cutting the credit lines won’t solve the problem itself. Paedophiles get around the payment system by swapping images online, usually by posting pictures anonymously to newsgroups, of which there are about 50,000. But if credit-card companies need inspiration, they could draw it from internet search engines that do not address paedophile queries any more. Although, as Taylor admits wearily, there are ways around that too. “The internet is an anarchic place,” he says. And a lucrative one.
March 27, 2004 at 11:29 PM in Financial Services, Online crime | Permalink
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