So do bad guys really store information in photographs?
Yes. ISIS encodes stuff in pornography, reports StrategyPage
Another pr oblem, that is less talked about openly, is the enormous amount of pornography found on Islamic terrorist computers and the potential problem with the possibility that some of it may contain hidden messages. This is called steganography (hide encrypted text messages in digital JPG, GIF or whatever images). Steganography has been around for a long time but only became really practical with the arrival of cheap and powerful PCs.wikipedia page: Steganography, and it's use goes back to the days of Herodatus.