U.S. financial industry enlisted to police online vice

Visa, MasterCard, American Express, Discover, Bank of America, Chase, Citigroup and PayPal are participating in the newly formed “Financial Coalition Against Child Pornography.

Visa, MasterCard, American Express, Discover, Bank of America, Chase, Citigroup and PayPal are participating in the newly formed “Financial Coalition Against Child Pornography,” according to a report in USAToday.com:

The financial institutions will report child porn sites they discover on the Web to a central tip line, slated to expand next month to receive the information. The companies will block transactions for online child porn or, if law enforcement opens an investigation, help track sellers and buyers.

Senator Richard Shelby and the National Center for Missing & Exploited Children spurred the creation of the coalition. Financial institutions are already assisting law enforcement in curbing Internet gambling. The state of New York has been recruiting credit card companies to “fight against online gambling” for many years:

When initiated, credit card transactions are "coded" to indicate what is being bought or sold. By blocking certain codes, banks that issue credit cards can avoid issuing credit for much (but not all) gambling activity that occurs on the Internet….many large credit card issuers, such as Bank of America, Fleet, Direct Merchants Bank, MBNA, Chase Manhattan Bank and Citibank, have begun blocking such transactions.

The U.S. House Judiciary Committee approved legislation this week aimed at banning the estimated $12 billion Internet gambling industry, as reported by ZDNet:

The measure would update and expand existing law to cover all forms of interstate gambling in the United States and would bar a gambling business from accepting payment in the form of credit cards, checks, wire and Internet transfers. It would also prohibit gambling on an estimated 2,300 Internet gambling sites, many run by offshore companies, and also require banks to block gambling transactions by customers, which the industry has argued would be difficult to identify.

Despite the committee's approval, 25-11, it remains unclear whether the legislation will reach floor votes in the House and Senate this year.

The U.S. gaming industry is seeking to avoid such legislation from becoming law. As I cited in “HBO not gambling with online betting,” The American Gaming Association, national trade group of the commercial casino industry, is going on the offensive to stave off a ban on Internet gambling:

Its 2006 State of the States report touts the positive economic impact of the U.S. commercial casino industry—providing $12.6 billion in wages to 354,000 employees and paying $4.92 billion in state and local taxes—and portrays a typical U.S. Internet gambler as “under 40, college-educated, male and more affluent than his fellow citizens."

The report also underscores a growing popularity of online gambling, while noting “confusion” about its legality: “a mere 19 percent…realizing – or willing to admit – that the activity currently is illegal in the U.S.”

Will the intervention of financial institutions hamper the growth of online vice? Join the conversation: “Talk Back” below to share your thoughts.