Dashboard: Chipping Away at Privacy? The 'Spy Chips' Debate

As debates about surveillance and wiretapping swirl around, it's no surprise that these tiny radio frequency-emitting computer chips have have become a a flash point for heightened privacy concerns.

Introduced as a technology upgrade of the bar code and intended to help streamline supply chain operations and bolster customer loyalty, Radio Frequency Identification (RFID) has become a flash point for heightened privacy concerns. As debates about surveillance and wiretapping swirl around us, it's no surprise that these tiny wonders of technology--RF-emitting computer chips smaller than a grain of sand--have been dubbed "spy chips" by some. Among the most influential are Katherine Albrecht and Liza McIntyre, whose Spychips books and Web site allege that RFID chips will be used to invade people's lives, enter their homes and snoop on their purchases and movements.

Predictably, such charges have engendered an equal and opposite reaction among RFID proponents. For example, Nicholas Chavez, President of Denver-based RFID Ltd., wrote a chapter-by-chapter rebuttal of Spychips that he claims has been downloaded nearly 25,000 times. While Chavez characterizes RFID opponents as "propagandists" who deliberately use the "spy" reference as a scare tactic, he fails to note that mainstream technology publications also have been making reference to spy chips for years. Indeed, a number of U.S. states have passed bills or conducted studies to address the impact of RFID technology on consumer privacy. The European Commission recently said it was prepared to extend EC privacy legislation to cover RFID technology. Meanwhile, an executive of GS1, which administers the bar code system in Europe, said RFID and its associated technologies should be brought under the organization's existing privacy scheme, which requires retailers to post signs telling customers items are tagged, and to give customers the right to have tags switched off or destroyed at checkout.

"Item-level RFID is a classic example of a technology vision getting ahead of society's ability to assimilate it," says Forrester Research senior analyst Nikki Baird, "and the industry didn't help by jumping into trials without considering the social aspects of what they were doing. So, on the one hand, the reaction is justified because industry leaders and leading-edge retailers hadn't initially set out policies around data collection, usage, sharing or protection. Public response drove them to develop those things--rightly so."

Baird says none of the things critics worry about are remotely interesting to retailers, for whom preventing stockouts is the holy grail. But the privacy invasions are theoretically possible, "which means the industry can't flat out deny them--thus, the controversy lives on."

Given that the slightest bit of tin foil can throw off a case-level scan in a warehouse environment that's been optimized for RFID, Baird notes that "it's really hard to imagine a scenario where Lowe's knows what kind of shoes I wear because they scanned them when I walked through their door."

The state of alarm among the general public also has been low. "Consumers see near-term economic and public good benefits to some item-level RFID deployments, like tagging prescription drugs," says Forrester principal analyst Christine Overby. "Of course, this is also contingent upon companies adhering to an RFID privacy code of conduct."

The bottom line is that most customers will trade information about themselves in return for something that is valuable to them. The challenge, says Baird, "is to find the right offer and to collect the right data."

Fast Lane: Adobe Takes RFID To The Washroom

In late April, Adobe began testing Cognos Systems' iLav RFID wireless sensors and software in four washrooms at its San Jose, Calif., headquarters. The sensors were placed in the paper towel, soap and deodorizer dispensers to send alerts through the building's data network when supplies are low.