December 24, 2005

RFID Fears Create Their Own Market

By Evan Schuman, Ziff Davis Internet

Opinion: A grad student's invention may hint at what lies ahead for the wireless world: wallets that block RFID signals.

Like a counterintelligence officer or an anti-spyware company, some entities in life have the sole raison d'�tre of countering something else.

RFID (radio-frequency identification) today is an unstoppable supply chain force and even the most fervent privacy advocates concede that.

But as retailers and manufacturers continue to toy with ways to use RFID in both the shopping lane and the warehouse, those privacy advocates are going to try to find ways to minimize what they see as the technology's intrusiveness.

In the book "Spychips" (see eWEEK's review), the authors use company memos and Web site documents to argue that consumers might be tracked in a wide range of ways.

And retailers are fighting the desire to gather more sophisticated and usable CRM (customer relationship management) data for fear of the possible backlash from privacy advocates.

This state of affairs prompted one Rensselaer Polytechnic Institute grad student to use some simple ingredients to craft an RFID-proof wallet.

Dustin Kirk's creation is not the most attractive wallet in the world, but all it needs is a thin layer of fabric and you have the start of a wide range of products whose sole purpose is thwarting RFID tracking at the customer level.

The wallet is just one avenue. What about a device for a shopping cart that deflects or confuses any RFID inquiries, sort of like torpedo countermeasures for the shopping aisle? Or perhaps a room-wide device to prevent household snooping?

When it comes to consumer confidence, we're engaged in a clear perception—as opposed to reality—battle. Even if no retailers ever decide to use RFID for tracking products or credit cards that consumers are carrying, the fact that they could theoretically do so is enough to cut confidence.

Let's extend that perception versus reality issue: The fact that retailers and manufacturers might not even be able to do many of these things is irrelevant. If consumers can be made to believe it can be done, reality is an ineffective defense.

This is triply true when there is a financial incentive for some to encourage those fears.

Today, the only active opposition to RFID's expanding potential uses comes from privacy supporters. Whether or not that group is acting altruistically is an open question, but the fact that they are generally poorly funded is not. Poorly funded players rarely have the kind of political and industry clout needed to stop technology moves, although they can slow them down.

But if a cottage industry crops up for devices that can make money off of privacy fears, the dynamics could change.

The shield technology itself is quite simple, as any retail security officer who has arrested a shoplifter armed only with a purse lined with aluminum foil knows.

What implication does this have for the retail IT executive dealing with RFID implementation questions for 2006? Ignore privacy considerations at your own peril.

Do not comfort yourself with a truth defense. As I said, even if you're not planning on doing anything intrusive, that won't help as long as consumers believe that you have the ability to do so.

Some of the most damaging stories out today involve RFID pioneers who have experimented with consumer tracking and then denied it. Their reasoning may have made sense to them at the time, but the net effect is to cast doubt on honest retailers who pledge to use RFID only for supply chain help.

Does all of this mean that billions of RFID-defying wallets like Dustin Kirk's will start flooding Amazon.com?

Probably not. But for the moment, it's probably not a bad idea to keep RFID focused on the pallet, not the wallet.