Experts predict Radio Frequency Identification (RFID) technologywill replace the bar code in the next decade, because of the efficiencies it creates. Unlike bar codes, RFID tags can be made in tiny formats, some no larger than a grain of salt, and the tags don’t have to be manually scanned. Instead, RFID tags send out a radio signal that can be captured at a distance and at indirect angles by RFID readers, eliminating the need for an employee with a hand-held scanner to read a label. Retailers and manufacturers hope to save millions by automating the shipping and inventory process and reducing theft using RFID. In late August 2003, Wal-Mart announced it would require its top 100 suppliers to put RFID tags on all pallets and cases of shipped products by January 2005 and require the rest of its suppliers to begin using RFID tags by 2006. Privacy advocates fear RFID will become as omnipresent as video surveillance and give marketers another method of tracking people’s movements and shopping behaviors.

The retail industry isn’t the only sector moving toward RFID. On September 4, 2003, the San Francisco Public Library Commission approved plans to start tagging library books with RFID chips by 2005-06 to speed up lines at book check out counters, locate misplaced books, and reduce theft. With the cities of Berkeley and Santa Clara also considering the transition to RFID, civil liberties groups, such as the Electronic Frontier Foundation, have begun to raise concerns the technology will give anyone with an RFID reader, including homeland security agencies and businesses, the ability to track and identify library patrons and the books they borrow after they leave the library.

I. Opening Comments

• Senator Debra Bowen, Chairwoman

Senate Subcommittee on New Technologies

• Jack Grasso, Director of Public Relations, Uniform Code Council/EPCglobal

• Lee Tien, Senior Staff Attorney, Electronic Frontier Foundation

• Kristin Power, Director State Affairs, Grocery Manufacturers of America

• Representatives from the International Mass Retail Association (IMRA), Wal-Mart, and Procter & Gamble were invited to testify but declined to attend.

• All panelists

• Jackie Griffin, Director, Berkeley Public Library

• Karen G Schneider, Director, Librarians' Index to the Internet and Chairwoman, Intellectual Freedom Committee, California Library Association

• Lee Tien, Senior Staff Attorney, Electronic Frontier Foundation

• All panelists

What is RFID?

Radio Frequency Identification (RFID) tags are conceptually similar to, though much more advanced than, price bar codes found on most products people buy and to the magnetic strips found on credit cards and driver’s licenses.

A bar code, for example, pulls up a product name and price when it’s passed over a scanner designed to read the code. The strip on the back of a driver’s license contains all of the information that’s printed on the front of the card and can be read quickly by a computer when swiped though the machine.

RFID tags are tiny electronic computer chips that can be placed, for example, on pallets of factory-sealed products to readily tell shippers the quantity, type, date manufactured and destination as they pass through warehouse doors that are equipped with an RFID reader (also called an antenna). The tags can be read from 25-30 feet away and at indirect angles, removing any need for a person with a hand-held scanner to read the product.

RFID antennas can be placed on walls, shelves and doorways. Not only can they read the RFID tags that pass by, they can also electronically add brand new data to the tag, such as shipping date, arrival date, and condition.

What are other uses of RFID?

RFID technology is making its way into people’s everyday lives in a number of areas:

• Wal-Mart has announced plans to require its top 100 goods suppliers to tag shipping cases and pallets with RFID technology by 2005 and to require the rest of its suppliers to start using RFID tags by 2006.

• Wal-Mart and Procter & Gamble have tested RFID tags on Max Factor Lipfinity lipstick sold at the Wal-Mart store in Arrow, Oklahoma. Store shelves equipped with Webcams allowed Procter & Gamble researchers in Cincinnati, Ohio, to watch customers as they picked up and looked at the lipsticks. In a separate trial, Wal-Mart and Gillette have tested the usefulness of placing RFID tags on Gillette razor blades sold at Wal-Mart stores. RFID antennas on store shelves tracked when customers picked up razors, when they put them back on the shelf, and when they carried them to the register. The tests were designed to give insight on shopping behavior, prevent shoplifting, and to alert employees when shelves needed to be re-stocked.

• Seattle’s 24 public libraries are in the process of tagging their millions of library books, videos, and audiotapes with RFID chips and will begin using RFID tracking systems in spring 2004 to speed up book check out lines and help locate misplaced books. The cities of Berkeley and Santa Clara are considering a similar transition.

• RFID technology is what makes California’s FasTrak automated bridge toll payment program possible. Drivers with FasTrak’s RFID tags inside their car windshield can cross bridges without having to stop and pay a cash toll because the RFID tag contains a prepaid dollar amount (e.g., $50), and as the car passes the toll plaza, an overhead antenna reads the tag and automatically deducts the appropriate toll from the prepaid account.

• RFID is also used in the microchips frequently implanted in pets with information on the name of their owner, address, phone number, and more to help animal shelters readily identify and reunite lost animals with their owners.

• Alexandra Hospital in Singapore used RFID tags to track the movements of nurses, doctors, and visitors who came in contact with SARS patients. The European Union is considering embedding miniscule RFID tags into the fibers of European currency to reduce counterfeiting.

Are there concerns with RFID?

The Privacy Rights Clearinghouse, Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), and the Electronic Frontier Foundation have raised several concerns about the potential privacy implications of RFID technology.

Their main concern has to do with who will have access to the data RFID technology allows companies to collect and how it that data can be aggregated. For example, it would be theoretically possible for businesses to tag everything with RFID, allowing RFID antennas anywhere to scan the contents of people’s purses, wallets, shopping bags, not to mention identifying the makers of the clothes, jewelry, and shoes they’re wearing. The ability to collect, aggregate, and manipulate this information could give businesses a powerful marketing tool if they can use it to profile and identify potential customers as they walk through the mall entering stores and restaurants.

While the retail uses of RFID appear to raise the greatest concern, some believe other uses, such as tagging library books with RFID chips, pose a threat as well. If people can be identified and profiled according to the library books they read and carry with them, homeland security agencies seeking to identify potential terrorists and businesses wanting to profile customers’ interests may use RFID readers to track and identify people and the library books they’re carrying with them. Some experts predict that if uniform technology standards are developed and RFID becomes ubiquitous, the entire contents of people’s handbags, shopping bags, and even the clothes they wear, will be identifiable as people walk through a doorway equipped with an RFID reader at stores, airports, and government buildings.

What laws limit businesses from tracking people?

Technology already allows people to be tracked from their morning coffee stop to their evening trip home from work. In many cases, the federal or state government has acted to restrict how businesses can use the information they collect on people.

• Every purchase made by ATM or credit card, leaves a detailed electronic record with both the store and the bank, which over time can indicate interests, shopping patterns, likely income levels, and more to financial institutions. Federal law allows businesses to share that information freely with their many affiliates and subsidiaries.

• People who sign up for loyalty card programs at their local supermarket are essentially allowing their grocer to keep tabs on what they buy and how much they spend over days, weeks and years. California law restricts how that information can be used.

• People who watch cable or satellite TV often don’t realize their viewing records can be monitored and used for marketing purposes by their provider. However, federal and state laws prohibit cable and satellite companies from selling that data to others.

• Libraries and video stores keep track of the books and movies people check out, but federal laws ban them from revealing that data to anyone.

• Phone companies keep track of the local and long distance calls their customers make, though federal and state laws strictly prohibit them from listening in on phone conversations or selling information about who their customers call.

• Many employers read employee e-mail, track keystrokes, and follow employees as they visit Internet websites at work. This practice isn’t precluded by law and employers aren’t required to tell their employees that their actions may be monitored.

• Internet businesses frequently drop bits of software, such as "cookies" and "web bugs" on the computers of people who visit their sites to track people’s whereabouts online.

• Meanwhile, as people walk down city streets, enter businesses, drive through intersections or ride public transit, surveillance cameras may be recording their every move. Some cities have begun to test whether they can more effectively reduce crime by combining surveillance cameras with face scanning technology and criminal databases containing mugshots of former inmates and suspected terrorists.

• November 15, 2003. MIT’s Media Lab in Cambridge, Massachusetts, holds an RFID privacy workshop. Attendees include privacy advocates as well as companies that manufacture RFID technology, such as Intel, NCR, PhillipsSemiconductors, and ThingMagic, while retail and manufacturing companies with plans to use RFID, such as Wal-Mart and Proctor & Gamble, are not participants in the workshop.

• October 31, 2003. The Massachusetts Institute of Technology (MIT) Auto-ID Center completes its four-year study and development of RFID systems and hands its work off to a EPCglobal, a new nonprofit subsidiary of the Uniform Code Council, which oversees the use of bar codes. EPCglobal plans to continue researching RFID and to develop uniform technical standards and specifications for RFID systems, so companies developing RFID services create systems and system components that can be integrated.

• October 23, 2003. The Department of Defense sets a new policy requiring all of its suppliers to embed RFID tags on individual products, or at least on cases and pallets, by January 2005.

• October 16, 2003. United Kingdom clothing retailer Marks & Spencer begins a four-week trial of RFID tags. The so-called Intelligent Labels – designed to be cut off and thrown away after purchase – can be found on paper labels attached to men’s suits, shirts and ties on sale at Marks & Spencer’s High Wycombe store in the U.K.

• October 14, 2003. A preliminary report by the Food and Drug Administration (FDA) indicates using RFID on drug products could mitigate the growing problem of counterfeit drugs. The report discussed placing 98-bit or 128-bit RFID "license plate" tags on drugs that would identify the manufacturer, describe the drug type, quantity and manufacture date, and include a unique identification number, allowing the drugs to be verified through the shipping and customs process.

• September 15, 2003. At the Electronic Product Code Symposium in Chicago, IBM unveils its new radio-frequency identification service to help businesses streamline product inventory and shipping and eliminate "shrinkage" (lost, broken, and stolen goods). Kimberly-Clark, a paper products company, announces it has already signed up for IBM’s RFID services.

• September 10, 2003. Two years after the September 11 terrorist attacks, Oak Ridge National Laboratory in Tennessee announces its new RFID-based building evacuation solution, called Evacuation Monitoring and Accountability System, or EMAS. The system uses "smart badges" – plastic ID cards containing RFID microchips – worn by building employees and visitors. Installed RFID readers at building entrances automatically track when a person enters or leaves the building and transmit that information to an offsite database.

• September 4, 2003. The San Francisco Public Library Commission approves plans to fund a new RFID tracking system for library books in its 2004-05 budget.

• August 27, 2003. RSA Security announces it has developed an RFID blocker tag, which is similar in size and cost to an RFID tag, but protects privacy by disrupting the transmission of information from RFID tags to RFID scanners.

• August 18, 2003. Following a June announcement to require its top 100 suppliers to use RFID systems by January 2005, Wal-Mart announces all of its suppliers will have to put RFID tags on shipping pallets and cases by 2006.

• July 17, 2003. The Advanced Airport Systems Technology Research Consortium announces tests using RFID tags on luggage at Changi Airport in Singapore, Schiphol Airport in Amsterdam, and John F. Kennedy International in New York in the coming months.

• July 9, 2003. Wal-Mart halts initial tests to develop an RFID "smart shelf" system with Gillette.

• June 18, 2003. Delta Airlines announces plans to test RFID-chipped luggage tags this fall on flights from Jacksonville, Florida, to its Atlanta hub.

• June 11, 2003. Wal-Mart announces plans to require its top 100 goods suppliers to tag shipping cases and pallets with RFID technology by 2005.

• June 11, 2003. CASPIAN, a nonprofit opposed to RFID technology, proposes federal legislation called the "RFID Right to Know Act of 2003," which would require companies to label products containing RFID tags. The bill has yet to be introduced in Congress.

• June 2003. Gillette Co. orders 500 million RFID tags from Alien Technology and states it plans to test RFID in its warehouses and on store shelves to sense when inventory is running low and to detect shoplifting. Wal-Mart agrees to test the "smart shelf" concept with Gillette.

• June 1, 2003. The United Nations unveils a plan to test RFID technology in Africa to track VIPs, negotiators, and political advisors.

• June 2003. Benetton clarifies it’s only researching RFID and has no plans to place RFID tags in clothing.

• May 2003. Visa and Phillips Electronics announce a partnership to develop a credit card with an RFID chip.

• May 2003. Metro AG of Germany implements RFID technology in its Rheinburg store. Loyalty cards guide shoppers to products that might interest them, based on their previous purchases. RFID chips on store merchandise also help Metro determine when a product needs to be restocked and helps expedite the check-out process for customers.

• May 2003. Hitachi and the European Central Bank (ECB) discuss implanting small RFID chips in currency to halt counterfeiting.

• May 2003. Alexandra Hospital in Singapore uses RFID tags to track the movements of patients, visitors and staff in contact with SARS patients.

• May 1, 2003. Research firm Gartner reports poor performance of RFID in trials, including statistics showing scanners used to read product data embedded in RFID chips are often less than 80% accurate. Gartner researchers report difficulty in reading tags through certain materials such as shampoo, canned goods, and foil packaging.

• April 4, 2003. Benetton announces it has not embedded RFID tags in its clothing products and merely plans to study the technology, including the potential implications for personal privacy.

• April 2003. Auto-ID Center announces a password-associated "kill" command for its chips being developed by companies such as Alien Technologies, Matrics Corporation, and Phillips Semiconductors.

• April 2003. Merloni Elettrodomestici of Italy unveils plans to manufacture "intelligent" appliances: refrigerators and washing machines that can read RFID chips on groceries or clothing to determine expiration dates or washing directions.

• March 11, 2003. A press release by Phillips Semiconductors announces Benetton Group will be placing RFID tags on its Sisley garments in more than 5,000 stores throughout the world.

• March 2003. The U.S. military uses RFID tags to track food and supplies entering Iraq. Chips are sewn into wristbands worn by wounded soldiers to track them as they move through field hospitals.

• January 16, 2003. ACLU releases a report entitled, "Bigger Monster, Weaker Chains: The Growth of an American Surveillance Society." The report points out how RFID chips could be used for many purposes beyond their stated intent.