Data mining as you shop

Telecom Asia, April, 2004 by Stewart Fist

The global war over privacy in consumer purchase tracking has really just begun with a minor skirmish in Germany.

In February, the Extra Future branches of the gigantic Metro Group (department stores) were forced to withdraw customer loyalty cards when the press discovered that the company had secreted radio-frequency identification (RFID) tags in the plastic.

Even when enclosed in a wallet or purse, these cards can transmit information over distances of about a meter, and the store planned to use them to track which departments the customer visited.

The German press took umbrage at this invasion of privacy, with the result that Europe is experiencing a tidal wave of reaction to both customer and purchase tracking.

Metro's problems aren't yet over. Privacy and liberties activist groups are planning a series of rolling demonstrations outside its stores to force them to sign a moratorium on item-level product tagging. And when privacy advocates checked the store's RFID deactivation kiosks, they found the equipment often left tags only partly disabled, leaving the products stilt radio-readable.

Of course it is not always in the interests of the store to deactivate a tag, which is currently impossible to do at any distance without isolating and handling each item.

Supermarkets dream of being able to read, price and bill all items in your supermarket cart without needing checkout staff and barcode readers. In the supermarket of the future, they believe you'll just load up your cart and wheel it out of the store. The store's radio readers will add up all items, strip your identity from your loyalty card, issue a confirmation printout, and then communicate with the bank to bill your account direct.

Large organizations can also see the value of storing and processing this personal preference information themselves or in passing it on to market-profiling companies.

Tracking vs profiling

RFID is fast becoming the ultimate "data mining" scare for privacy advocates: it can lead to individual purchase profiling. If you add to this the prospect of RFID tags on your driver's license and the ability to track individual and vehicular movements via mobile phones and toll-gate devices, it isn't long before an Orwellian nightmare emerges.

Large retail stores, marketing organizations and government authorities such as the taxation department will potentially be able to construct a detailed profile of your travel and shopping habits, your spending patterns, the services you use and the venues you visit.

Currently the spread of these technologies is limited only by commercial cost-benefit decisions and the threat of a political or commercial backlash.

On the positive side, we can also see the value of RFID in manufacturing (especially in the supply chain of large-scale consumer-product industries), and increasingly in hospitals and pharmacies where immediate and accurate identification of critical products is essential.

In the US, both Wal-Mart and the US Department of Defense have stipulated that all suppliers must begin using RFID on crates and pallets by January 2005. The Yankee Group predicts that this will add between $1 billion and $4 billion in technology and support services costs within the supply chain, but presumably it will save even more.

Radio tagging has been extensively used around the world for road tolls and container management for more than a decade, but these were relatively large RFID units, which were openly displayed and their use was controlled by the customer rather than the retailer.

It's a different problem in retailing. Microdot-sized radio tags are now being made cheaply, and production techniques are capable of creating tags with individual IDs rather than product numbers. So it is possible now to secretly track the item, rather than openly identify the product.

But potential uses can also improve safety. The Australian cattle industry is using RFID to track meat on the hoof, from birth to slaughter. This information is transferred to barcodes on the package so that the meat can be tracked right through to individual sales.

With such technologies, it is possible to identify the source of meat on the dinner table, and for retailers to issue product recalls to individual purchasers.

So I guess your attitude toward RFID depends on which sort of flesh the retailers are tracking and for what reason.

Stewart Fist (fist@ozemail.com.au) is an Australia-based, award-winning journalist and columnist, and author of The Informatics Handbook