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Radio Frequency Identification Promises Profits, Convenience; Worries Privacy Advocates - 2004-07-21

The little bar codes you see on consumer products and scanners at checkout counters revolutionized shopping and inventory control when they were introduced 30 years ago. But a hot new technology, called RFID, has product manufacturers dreaming of bigger profits and critics worrying about its potential for snooping into every corner of our lives.

RFID stands for radio frequency identification. It relies on a silicone microchip, no bigger than a grain of sand, attached to a tiny antenna. A separate reader silently sends out a low-level electronic pulse and reads EPCs, or electronic product codes embedded in the chip. Josh McHugh, a writer for the magazine Wired, got a close-up look at the technology at a test facility called The Future Store near Düsseldorf, Germany. "The shelves that these RFID products are sitting on are keeping track of where each little chip is," said Josh McHugh. "So when you pick a product up off the shelf, that registers. They even measure how long you have a product off the shelf. If you put it back, they'll record that."

And super-fast checkouts are on the horizon. Customers will simply roll their shopping carts past an RFID reader that instantly registers everything in the basket and charges your bank account. You keep on rolling, right out the door.

That's definitely the Holy Grail of convenience: not ever having to stand in a supermarket line to check out. And that would be easy to do if every product had an RFID chip on it.

This technology is modeled, in miniature, after the EZ pass highway toll system and freight railroads' transponder networks. An automobile equipped with an EZ pass can sail through a toll booth without stopping, and the driver's account is debited. At several checkpoints along their tracks, railroads can read codes on boxcars and track the contents of every car. Similar little sensors have long been attached to clothes, compact discs, and jewelry to thwart shoplifters.

Information gathered by the new RFID readers will tell where products are in the store, where they came from, how many have been sold, and when it's time to re-order. From this information, data bases can assemble read-outs on customers' buying habits.

Roughly $20 million in grants from Kraft Foods, the Wal-Mart store chain, and other big companies funded RFID research. It has spawned a whole new worldwide industry developing microchips, readers, and software.

A company called EPC Global obtained patent rights to commercialize the radio-frequency ID technology. EPC Global's Jack Grasso says one of the first applications will be to fight product counterfeiting.

"It's a $500 billion global problem, counterfeit products of all kind, including counterfeit drugs, which in some countries is as much as 35 percent of their total drug supply," he said. "EPC [electronic product codes] can help reduce that."

A company in Maine called Chipco is about to market RFID, enabled poker chips. Chipco president John Kendall says casinos want to catch counterfeiters, too. But they will also use RFID to track players' habits.

"The casino wants to know how much the player bets when he puts the chips down on the table," said John Kendall. "And so we have readers which can read the stack of chips. If you have a player that's at a minimum-bet table, and he's been betting $5 for the past 20 minutes, but all of a sudden he starts betting $500, the casino would want to be alerted to that to see if the individual is in fact a card counter."

RFID readers will help the casino identify big losers, who are its favorite customers. Then they can ply them with free meals and shows so they'll stick around and keep gambling.

This kind of tracking is a perfect example of what critics like Harvard University graduate student Katherine Albrecht consider to be a dangerous invasion of privacy.

Ms. Albrecht founded a group called CASPIAN, Consumers Against Supermarket Privacy Invasion and Numbering.

"What's really changed now is a trend within the retail industry to link individuals to purchases," she said. "Who, exactly, is buying what products? Every physical object manufactured on Planet Earth will have its own, unique number. Literally everything you purchased, if you provided your identity at the point of sale, would be linked to you in a data base."

Imagine, says Katherine Albrecht, that an RFID tag is impressed into the sole of your shoe.

"You're walking around an environment that is filled with reader devices that are picking up that unique number everywhere you go," she said. "Given the ubiquitous reader network that's been discussed, it would make it possible for your whereabouts and your comings and goings to be logged in various computers."

RFID-type chips are already implanted in cattle and pets, to help track lost animals. And some human law enforcement officers, including the attorney general of Mexico, have implanted microchips under their skin so they can be located at all times. This has prompted some observers to wonder what a rogue government would do with tracking devices if most of its population were embedded with microchips.

And what about this nightmare scenario: a sophisticated thief, strolling down a hotel hallway with an RFID scanner, getting a read on valuables inside the rooms?

That's far-fetched, says the industry's Jack Grasso.

"The information on those tags is only meaningful to people who have access to very large and very secure and protected data bases," he said.

Tell that to Josh McHugh, who removed the RFID tags from some products at that test store in Germany and took them to some computer hackers he knows.

"They took a scanner, a little thing about the size of a matchbox, waved the chips over the scanner, and they told me exactly what I had bought," said Josh McHugh. "That was a little bit weird!"

Wal-Mart stores, the Albertson's grocery-store chain, and other big retailers have given their suppliers a deadline, now just months away, by which they must include radio frequency codes in shipping cartons, so they can be read at the stores' loading docks. Unless lawmakers forbid it, RFID tracking of individual pairs of pants and tubes of toothpaste and more people than just police officers, will not be far behind. The European Union is even looking into weaving RFID chips into cash currency - one of the last forms of human exchange not touched by technology's intrusive hand.