Privacy issues must be addressed to control identification technology

The worldwide introduction of trials in Radio Frequency Identification heralds the arrival of a new weapon in the fight to streamline inventory management and improve market control by allowing for the more efficient tracking of products. This in turn has the potential to bring down costs for producers, manufacturers and distributors and has the potential to bring down prices at the sales "coalface".

For the uninitiated, an RFID system works on the same principles as a scanner/bar code system, but offers much more scope. The RFID chip needs no power (the power is in the reader) yet can be scanned through packaging, hence a pallet load of goods can be scanned without unloading to check each individual items' bar code. Goods trains and semi-trailers can pass through scanners en-route providing shippers with up to the minute information on the location of their goods.

These savings can be substantial. When Wal-Mart (the US supermarket chain) proposed the introduction of RFID technology in June 2003 it was estimated that its savings could amount to as much as US $1.3 billion to US $1.5 billion based on a six to seven per cent reduction in supply chain costs. However, these savings are based solely on cost-cutting in the distribution area. While the current focus of RFID technologies is in the tracking of cartons and pallets, the technology is not expected to truly take off until the price of tags drops to the point where their versatility allows them to be used in stores to more accurately monitor sales and stocking issues. As production increases, it is expected that the tag price will drop from approximately US 0.50c - $1.00 down to a few cents.

It is here, however, that business should pause to consider an increased recognition for consumer rights. Consumers are no longer content to accept what is offered. The Internet has not only been responsible for informing, it has also misinformed, allowing conspiracy theorists to have a field day. But when there is some basis to their theories the misinformation spreads much more easily and is much more believable. The introduction of RFID overseas has been a lesson in how not to introduce such technology. Ignorance of consumer issues has seen some companies face the consumer backlash.

Gillette introduced a trial project using RFID tags on their Mach 3 razor blades in conjunction with UK grocery giant, Tesco. However, protesters began gathering outside the stores when it was found that the supermarket was automatically taking photos of customers picking up the blades. Despite claims by Gillette that they were only using the chips to improve their supply network, the result has been a worldwide call to boycott Gillette by the US-based group "Consumers Against Supermarket Privacy Invasion and Numbering" (CASPIAN). The group's director Katherine Albright is quoted as saying, "Consumers will not tolerate being spied on through the products they buy". A proposed similar trial by Gillette in Wal-Mart stores in the US was subsequently cancelled in July.

Privacy activists have the real concern that the uncontrolled use of these tags will allow shops to gather large amounts of data about customer/store activities and link this to their customer information databases. There is also the possibility that this monitoring will continue after the goods have left the shop. Any reader can scan tags and it is proposed to put these readers in shop doorways. This may help stamp out theft as well as improving stock monitoring and continuing to allow these tags to be read after they have been legally purchased may increase the retailers knowledge base, however this would be seen by most as an unacceptable intrusion into the shoppers personal space. Of further concern is that the data gathered could be stored overseas to remove it from Australian consumer protection and privacy laws. As one witness to RFID hearings in a Californian Senate hearing said, "How would you like it if, for instance, one day you realised your underwear was reporting on your whereabouts?"

With such emotive aspects surrounding this issue it deserves more than the offhanded one liners we have come to expect from the Government's Information Technology Minister. Senator Alston's approach to the rapid build-up of broadband usage in Korea was "they like pornography" and his advice for handling the Spam deluge was "just don't open it". Senator Alston's sole response to the problems surrounding the introduction of RFID is that it is a matter for the Privacy Commissioner. Ignoring the fact that the PC is under-resourced for current activities, the prospect of a long investigation over several countries to follow the data path would stretch the Commissioners resources to the extent that all other mandated work would suffer.

The only solution is a legislative framework which respects the right of business to work as cheaply and effectively as possible while at the same time respecting the privacy concerns of the consumer. At the very least, this means mandating that all goods carrying such tags be identified as such, that these tags be switched off at the point of sale unless the consumer gives informed consent to the contrary and that no personally identifying information is connected with the data gathered by the RFID tags.