Dont Tag RFID With Privacy Rap

The mixed signals emanating from Wal-Mart about RFID have led some to question the impact on privacy. But membership programs, not RFID tags, pose a more legitimate privacy problem.

In the most curious fit of corporate communications confusion since the iLoo, news stories this week noted both that Wal-Mart was abandoning its smart-shelf trial and that it was affirming its embrace of the technology over the next x years. It looks like Wal-Mart may need RFID tags simply to track its own schizophrenic direction.

Wal-Mart claimed that the shift was part of a push to move RFID from the store floor to the warehouse floor, but other reasons could have influenced the companys decision. Cost could also still be an issue. RFID chips continue to come down on price; perhaps theyll be featured in an imminent Blue Light Special. In any case, despite the mixed messages, it appears as if the sultan of supplier squeezing has a long-term commitment to the technology.

The thought of Wal-Mart adopting RFID has raised the hackles of privacy advocates who fear that adding RFID tags to products will open the door to pervasive tracking of consumer purchases. One scenario uses the unlikely scenario of RFID-enabled clothing being used to identify you when you return to the store. Doubts aside about whether the technology could withstand the abuse of daily wear and detergents, who is to say that some future version of the technology wont expire on checkout, much like todays security tags that are removed from clothing at the point of purchase?

While the threat of Wal-Mart, CVS, or any other large retailer tracking individual consumer behavior, particularly without their consent, is both scary and possible (albeit logistically difficult), RFID would play but a minor role in such a sales-tracking ploy. RFID certainly allows retailers to know more about what they sell you, but the information they care most about are things that are at best peripherally interesting to consumers—suppliers, lot numbers, SKUs, warehouse locations, shelf life and other fascinating details of inventory management.

Lets remember that, at least for this application, RFID tags track products, not people. The potential savings from better inventory controls, particularly better tracking of "shrinkage," far outweigh the highly speculative benefits that could be gained from comprehensive purchase tracking.

Membership Has Its Challenges

The bad news is that the carrots to induce consumers to give up their privacy are already here. From Fortune 500 warehouse clubs such as BJs to local drug store chains like Duane Reade, retailers are embracing "membership cards." Consumers gladly barter their personal buying data for the chance to save a dime on a two-liter bottle of Mountain Dew: Code Red. That RFID would somehow endanger consumers privacy more than todays bar codes do is absurd. Its the link that consumers are voluntarily creating.

Incidentally, there is a terrifying world in which all this instant recognition and tracking of individual purchase patterns takes place. Its called the Web. Millions of people around the globe have no worries enabling companies such as to make recommendations based on past purchases. Membership programs are "cookies" for the real world. Industry practices and regulations have already largely dealt with the privacy issues in the world of e-commerce. They would likely rise to the challenge in the brick-and-mortar world as well.

The RFID reactionaries should be ashamed of themselves for taking an innocent inventory management technology and portraying it as Big Brothers telescreen. These were the same arguments that were used to instill fear about GPS, the cellular phone and even the plain old landline telephone. Thats a track record not worth tracking.

Do you believe that RFID is a threat to privacy? Or are retailers encroaching on us in other ways? E-mail me.

Wireless Supersite Editor Ross Rubin is a senior analyst at eMarketer. He has researched wireless communications since 1994 and has been covering technology since 1989.

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