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issue: October 2003 APPLIANCE Magazine

APPLIANCE Line
Spying on the Consumer


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Editorial from Diane Ritchey, Editor, APPLIANCE Magazine

Imagine a day when, after you leave a retail store with a blender, for example, someone monitors that appliance and you. Think it can't happen? Actually, it's already possible by using radio frequency identification (RFID) technology, which employs microchips to wirelessly transmit product serial numbers to a scanner without human intervention. The technology is seen as an eventual successor to barcode inventory tracking systems, and promises to cut distribution costs for manufacturers and improve retailing margins.

Diane Ritchey, Editor

 In the last few months, RFID has been in the headlines, as at least one appliance company and a few retailers have experimented with the technology's potential use.

U.S. retailer Wal-Mart Stores was going to use the system in its stores, but canceled its plans, saying that the decision reflected a change of strategy. Personal care appliance maker Gillette canceled its plans to use RFID to prevent shoplifting and revolutionize stock control. Gillette had been the most enthusiastic supporter of the technology, which would involve planting a tiny computer chip in product packaging. By emitting a radio signal that carried a unique identifier, it would be possible to track every pack of the company's razor blades or batteries. According to Gillette, the company does not expect RFID tags to be used to monitor individual products in stores for at least 10 years. The chips will instead be planted in pallets and cases so that batches of products can be tracked between the factory and the store, the company said.

The technology is not new. The tiny chips and small antennae already can track products from the time they leave an assembly line to the time they reach a retail store. Already, clothes, drugs, auto parts, and copy machines have chips containing information about content, origin, and destination. Security cards have RFID technology that, when waived in front of a receiver, unlock the doors to offices. Another benefit may lie in product recalls. RFID could, perhaps, pinpoint a tainted batch of products, and, if a consumer paid with a credit card or used a store discount card, identify the consumer who purchased the items and contact them. That's something that could help the U.S. Consumer Product Safety Commission, which still is looking to solve the problem of ineffective product registration cards. Hooked up to a network like the Internet, the at-home devices could also provide details to marketers about a family's eating and hygienic habits.

And that is precisely where the controversy begins. Consumer privacy groups, in particular, have voiced concerns about potential abuses if RFID tags are allowed to follow people from stores into their homes. The groups suggest that the unchecked use of RFID could end up trampling consumer privacy by allowing retailers to gather information about activity in their stores and link it to information databases. They also worry about the possibility that companies, governments, and thieves might be able to monitor people's personal activities.

"Many of the harmful effects envisioned for the pervasive implementation of this technology could be avoided if RFID were restricted to supply-chain management and inventory control, if tags were killed at point of sale, and if personal identifying data were never linked to RFID tags," Beth Givens, founder of the Privacy Rights Clearinghouse, a nonprofit advocacy group, recently testified before a California state Senate committee. Ms. Givens instead suggested that RFID be subjected to a set of fair-use guidelines, to include companies informing consumers about products containing RFID chips by clearly labeling them; that consumers should have the right to permanently disable the chips upon purchasing such goods; and companies should provide consumers with the information collected about them via RFID tracking systems upon request.

The North American Retail Dealers Association's (NARDA) position on RFID, according to Larry Forssberg, vice president of Membership Marketing, is "supportive of methods that remove non-value added cost to products our members sell. As RFID technology moves forward, NARDA is interested in having a standardized approach. This would mean that appliance, consumer electronics, and other product suppliers would utilize RFID standards and avoid multiple stand-alone systems. This would be like agreeing to use the Universal Product Code (UPC) for product bar coding. This would allow a retailer to use RFID in a more cost-efficient manner."

One possible solution to privacy concerns comes from RSA Laboratories in Bedford, MA, U.S., where researchers have developed a blocking technique. The labs at RSA Security recently outlined plans for blocker tags, which are similar in size and cost to RFID tags, but reportedly disrupt the transmission of information to scanning devices and prevent the collection of data. The technique is still a concept in the labs, but the next step is to develop prototype chips and see if manufacturers are interested in making the processors, according to Ari Juels, a principal research scientist with RSA. Other options, such as a kill feature embedded in RFID tags, also are available, but with blocker tags. Mr. Juels says that consumers and companies may still be able to use the RFID tags without sacrificing privacy. Mr. Juels even foresees a day when tags in clothes can tell washing machines the proper way they need to be washed.

Even without privacy issues, the technology faces other challenges as well. According to a recent New York Times article ("A Radio Chip in Every Consumer Product"), RFID still has too many kinks to be an immediate panacea for retailers. "Cordless phones, two-way radios, local wireless networks, and other communication devices that are widely deployed in factories, warehouses, and stores can interfere with the signals," the article says. Costs are prohibitive, as well. Electronic tags cost at least U.S. $0.30 a piece, and most experts believe that anything above $0.05 is too expensive to be widely used for individual packaged goods.

What do you think? Do you believe these retail programs are too invasive, or do you support the use of technology that could potentially make retailers and manufacturers more efficient?

 

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