New tracking technology has incalculable advantages, such as keeping track of livestock and goods. But, by the same token, this revolutionary inventory management tool could take privacy concerns to a whole new level, columnist Harry Valetk says. The FDA recently approved the technology for implantable use in humans, and the State Department said it will use it in passports next year. So what's a consumer and a lawyer to do?
By Harry A. Valetk|November 09, 2004 at 12:00 AM
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Today more than ever, people are concerned about how much personal information is available to companies both online and offline. E-ZPass toll plaza signals, monitored email, spyware and face-recognition systems are just a few examples. But new tracking technology invisibly embedded in everyday products could soon take the current concern to a whole new level. Radio frequency identification (RFID) tracking technology uses electronic tags to automatically identify and track animals, goods and even, people. RFID TECHNOLOGY IN ACTION Farmers and pet owners currently use RFID tags to identify animals. Top Mexican officials use implantable RFID tags to access secure areas. Finland authorities developed RFID chips for travel cards, and the European Central Bank plans to use them on Euro banknotes in 2005. Dry cleaners and airline luggage systems may soon use RFID tags to benefit from its versatile, wireless tracking technology. Last month, the Food and Drug Administration approved RFID tags for implantable use in humans, and the State Department announced that in 2005 it will use RFID tags in passports. To be sure, RFID technology has incalculable advantages. Unlike the familiar bar code, which requires manual scanning of individual items, RFID inventory control systems can automatically log merchandise in bulk as it arrives at the loading dock. Tiny electronic product code (EPC) tags attached to individual items can be read by radio from distances of 20 to 30 feet. By the same token, this revolutionary inventory management tool could introduce new privacy concerns for consumers. RFID tags are so small they can function without a consumer’s knowledge or consent. They have the potential to gather unprecedented amounts of in-store product information that can be linked to a merchant’s customer database, and later shared with third-party corporate partners. Consumers advocates fear that merchants could associate this product data with any personal information taken at checkout. They could then use this information to target customers by name when they later appear within the vicinity of one of their stores wearing unobtrusively tagged merchandise, such as a sweater or watch. That information could prove invaluable in assessing personal consumer preferences and predicting individual consumer purchasing habits. Absent any provision for disabling these tags, critics worry that RFID could expose consumers to unforeseen risks by allowing tech-savvy burglars to inventory victims’ houses from a distance or adapt the technology to track victims through their RFID’d belongings that have RFID chips. SURVEY OF RFID PROPOSALS Balancing these varying concerns, policy-makers are taking action. In fact, several states — California, Utah, and Missouri among them — have already proposed several bills to regulate RFID, but none have yet been passed. Missouri’s proposal would require that retailers who sell RFID-tagged products label those items conspicuously. Utah’s bill goes one step further. It would not only require notice to consumers about the presence of RFID tags, but also it would require manufacturers and distributors to alert and teach retailers about how to kill the tags. Still, California’s bill is the most comprehensive. Merchants would have to get consumer consent before using RFID tags to track purchases, and all RFID tags must be deactivated before the consumer leaves the store. Additionally, under California’s approach, it seems that consumers could not consent to the use of their information beyond those uses identified in the bill. Critics of California’s approach argue that it’s overprotective, because consumers are not given the discretion to choose to benefit from post-purchase conveniences like no-receipt returns. CHILDREN’S PRIVACY Aside from these legislative proposals, existing privacy protection laws might also apply to any information collected, used or disclosed by merchants using RFID tags. For example, the Children’ s Online Privacy Protection Act (COPPA) prohibits Web site operators from collecting or disclosing personal information from children 12 years and under without first getting verifiable parental consent. COPPA defines the term “operator” as any person who operates a Web site located on the Internet that collects or maintains personal information about users or on whose behalf such information is collected. The term “Internet” is likewise broadly defined to include the myriad of computer and telecommunications facilities, including equipment and operating software, which make up the interconnected worldwide network of networks that use IP to communicate information of all kinds by wire or radio. Depending on how RFID tracking systems evolve in the marketplace, COPPA could conceivably apply. A merchant using the telecommunications technology in RFID tags to collect in-store product information from a child, and then associating that product information with personal information, may find itself violating federal law, unless it first gets parental consent. WHAT LIES AHEAD? It’s still too early at this point to determine how RFID will evolve in the marketplace. The key for the business community is to identify the real privacy risks associated with RFID versus those risks perceived by consumers. Indeed, only by addressing the real privacy risks head-on will companies be able to maximize on RFID technology. For now, attorneys could offer the following tips when counseling clients on how to implement RFID technology:
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