Playing Tag with Shoppers' Anonymity

By Jane Black In Biblical times, it was David vs. Goliath. Today, it's Katherine vs. Wal-Mart (WMT). Katherine Albrecht is a Harvard doctoral candidate and founder of a self-styled consumer group called Customers Against Supermarket Privacy Invasion & Numbering (CASPIAN for short). She's on a crusade against the giant retailer and other corporations that want to use a new technology called RFID, or radio frequency ID tags. These are tiny computer chips attached to merchandise that beam out unique identification information, such as serial numbers, to scanners as far as 10 feet away.

Wal-Mart announced in January that it would test a so-called smart shelf at its Brockton (Mass.) store that would use RFID tags to track the sale of Gillette (G) razor blades and automatically update inventory. Albrecht has been throwing stones at Wal-Mart ever since. On June 6, she claims to have seen the smart shelf in use -- and she took several photos for proof, using a disposable camera purchased on the premises.

Wal-Mart spokesman Tom Williams denies the shelf was ever put into use beyond the pilot trial and adds that the retail giant has no plans to use RFID technology in its stores in the foreseeable future. Instead, it's focusing on implementing RFID by 2006 to track inventory as it's shipped from suppliers to distribution centers and out to stores (see BW, 7/14/03, "Bar Codes Better Watch Their Backs").

WATCHING YOU EVERYWHERE? Still, the flap over RFID tags has grabbed headlines across the country. Earlier this year, Albrecht and other privacy advocates badgered Italian retailer Benetton (BNG) into calling off its RFID trial. Merchandizers say they're flummoxed. They insist the technology is a natural evolution of the bar code, one that will help smooth bumps in the supply chain and cut staff costs. And they say they don't quite know how to deal with Albrecht and privacy advocates who fear the technology's potential.

The critics are worried that the tags and the scanners will one day become ubiquitous. "[Our fear is] a global network of millions of receivers along the entire supply chain -- in airports, seaports, highways, distribution centers, warehouses, retail stores -- and in the home," says Albrecht. "Imagine if these chips are in clothes and tires and shoes. Companies could know where you are at any time, anywhere in the world." (For a video interview with Albrecht, see BW Online's Video Views.)

Sounds a tad like the futuristic vision presented in last year's Tom Cruise movie Minority Report, where company advertisements were pitched to individuals by name and consumer profile.

"THE 5-CENT TAG." However, global identification and tracking on the scale Albrecht envisions isn't yet plausible, except in science fiction. RFID tags cost too much to justify implanting one in every can of soup, pack of razor blades, or Benetton sweater. RFID readers alone can cost thousands of dollars, according to the Massachusetts Institute of Technology's Auto-ID Center, which is developing and promoting RFID-powered electronic product codes.

Still, Albrecht's concerns aren't just sci-fi. Sophisticated technology is rapidly reducing the costs of RFID technology. Morgan Hill (Calif.)-based Alien Technology (I'm not making that name up. Its motto: Bringing RFID Down To Earth) has developed a process it claims can package tiny integrated circuits for assembly into tracking tags at rates upwards of 2 million per hour (conventional methods allow for about 10,000 per hour). According the Auto-ID Center, "the era of the 5-cent tag is coming."

That's why Albrecht's crusade is so important. Her fears may seem extreme and premature, but the earlier consumer concerns are raised, the more they can frame implementation of tracking technology in a way that will never violate privacy.

SHOPLIFTERS, BEWARE! Documents on the Web site of the Auto-ID Center suggest that some companies are eager to integrate RFID, from the manufacturing floor straight through to checkout. One dated October 28, 2002, says that tests beginning in 2003 would focus on "using the low-costs tags at the unit level.... For example, there will be different tag types for Right Guard deodorant vs. Mach II packages (where the tag will be inside the package) and 2-liter Coke bottles (from which the tags will hang.)" Other products scheduled for testing include Caress soap, Pantene shampoo, and Huggies diapers, the document says.

Such tags wouldn't just help companies track sales. The MIT documents also mention tests involving an antitheft smart shelf that would "detect anomalous patterns of item removal" for Gillette products. For example, if a shopper removes more than a few items at once, the shelf could either use a computer-generated voice to thank the shopper for buying so much -- or alert a security officer or a surveillance camera to make sure everything is O.K.

Again, this is no joke. Gillette products like Duracell batteries and Mach III blade replacements are frequent targets of shoplifters due to their compact size, high value, and ease of resale. According to a Gillette spokesman, no shelf-level tests are under way at this time in the U.S. But British grocery giant Tesco and German retailer Metro are believed to be conducting such tests. These retailers were unavailable for immediate comment.

"NEUTRALIZE OPPOSITION." RFID backers are concerned enough about a consumer backlash to have asked public relations firm Fleishman-Hillard to help smooth the way toward implementation of chips in everyday consumer products. Fleishman-Hillard's report -- also available on the Web -- advises that "consumers are very concerned about invasions of their privacy" and are "inclined to believe that businesses have little incentive to protect consumers' personal information."

They're right on these scores. But rather than tailoring the technology to address such concerns, Fleishman-Hillard calls for a proactive plan to "neutralize opposition" and "mitigate consumer backlash." The documents advise product spokespeople to emphasize the "inevitability" of the technology and recommend characterizing RFID as a simple evolution of the bar code, rather than a new technology with futuristic capabilities (exactly the point that Wal-Mart is already making).

The documents also suggest creating a privacy council made up of "well known, credible, and credentialed experts" who might otherwise be "potentially adversarial advocates," such as members of Washington (D.C.) privacy group the Electronic Privacy Information Center. EPIC has said it won't serve on such a council or consult for other companies.

THREE SIMPLE RULES. Auto-ID Center Executive Director Kevin Ashton acknowledges the documents' validity, though he does take issue with the interpretation: "There's no smoking gun in any of those documents," he says. The uproar over shelf testing is premature, he cautions, since company plans and schedules remain fluid: "The big news is that Wal-Mart has decided to use electronic product codes in all its shipping and palettes. That's faster than anyone expected, and right now it needs the time and attention of everyone in the RFID community."

Ashton takes strong issue with Albrecht that the Auto-ID Center is dismissive of consumer privacy. In an interview with BusinessWeek Online, he outlined three pillars of privacy that he believes must be included to make RFID tags a success.

First, consumers must be notified if an RFID tag is in any product they purchase. Second, each chip must have a "kill command," which means it can be turned off either on principle when the customer leaves the store or upon request. Third, no individual chip will be linked to any personally identifiable information: The chip will indicate that razor blade pack 123 was purchased, not that it was purchased by Jane Black.

The Auto-ID Center doesn't have the power to enforce such practices. But smart retailers will. Following Ashton's three simple principles would permit retailers to be more efficient and provide lower prices without impinging on customer privacy. And that would make Wal-Mart, Katherine Albrecht, and millions of shoppers very happy. Black covers privacy issues for BusinessWeek Online in her twice-monthly Privacy Matters column

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