Introduction

The Internet gave computers around the world a single network for sharing data. Now, the emerging technology of radio frequency identification (RFID) promises to create a vast network of things -- wirelessly linking together everything from animals in migration for scientific research, to building movements in earthquakes, to the vast array of products that businesses make, retailers sell, and consumers buy. In its simplest form, RFID technology can take the form of a tag, potentially costing just pennies, much like the standard barcode tags on products in the supermarket. The difference is that while it takes a laser to scan a standard barcode and read its Universal Product Code (UPC), an RFID tag stores its identifying code on a tiny microchip and transmits it wirelessly to a reader device. That design allows more tags to be scanned at once from further away, and it allows individual items -- not just types of items -- to be assigned unique identifying codes.

The advent of standard barcodes brought tremendous efficiency gains in the distribution and retail industries, and RFID devices now hold even greater promise. Wal-Mart and other industry leaders have begun to introduce RFID technology into their supply chains, the Food and Drug Administration has recommended their ubiquitous use on pharmaceuticals, and the Department of Defense plans to boost its use of the tags this year. The potential benefits to the economy and consumers are vast: RFID tags may facilitate dramatically reduced supply-chain costs, better inventory management, automated store checkout, reduced theft, more accurate and efficient product recall, improved counterfeit drug prevention, and a host of other benefits.

Yet despite the tremendous potential benefits of RFID technology, privacy advocates worry it could lead to more detailed tracking of the products we buy, maybe even to the level of taking inventory of what is in our homes and what is on our person at any given time. Arguing that stores, corporations, and even libraries will use the technology to spy on people, RFID critics have threatened boycotts to derail the technology's adoption. In response, a number of companies have postponed item-level RFID programs and lawmakers in several states and the U.S. Congress have introduced legislation that, if passed, would curtail the use of RFID technology.

Yet the privacy alarms being raised are at best premature and at worst hypothetical and impractical. Because this is such a promising yet nascent technological application, PPI believes that the call for RFID legislation is not yet warranted. Instead, industry should continue its efforts to educate customers about RFID technology and to notify them when they purchase items with RFID tags. Government, in turn, should actively monitor industry efforts to develop and abide by a set of RFID self-regulatory best practices that includes notification.