AIDC 100 — Oct. 5, 2006 1 Is Privacy RFID’s Achilles Heel? There is growing evidence that RFID opponents are winning the war against radio frequency identification.

AIDC 100 — Oct. 5, 2006

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Is Privacy RFID’s Achilles Heel?There is growing evidence that RFID opponents are

winning the war against radio frequency identification

AIDC 100 — Oct. 5, 2006

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INTRODUCTION

Mark RobertiFounder and EditorRFID JournalMroberti@rfidjournal.com

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PRESENTATION SUMMARY

• The item-level opportunity• Losing the battle for hearts and minds• The industry’s response• Capitulation!• Factors contributing to RFID’s problems• Why we can’t be complacent• What we can do to address the problem

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THE ITEM-LEVEL OPPORTUNITY

Item-level tagging represents the biggest opportunity for vendors• Global retail sales in 2005: $8.7 trillion• Assume an average price per item of $10• 870 billion item tags• Readers covering miles of shelving, in-store displays, racks and so on

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THE ITEM-LEVEL OPPORTUNITY

Item-level tagging represents the biggest opportunity for end users• Only item-level tagging will reduce:

• Out-of-stocks• Shrinkage• Counterfeiting• Unsaleable goods that have passed their

expiration date

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LOSING THE BATTLE

But the opportunity is slipping away . . .

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LOSING THE BATTLE

Consider these facts:

• Google returns 227,000 references to “spychips” — up from 165,000 in August

• Spychips.com ranked 5th by Google when searching for RFID

• Electronic Privacy Information Center’s RFID page ranks 10th

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LOSING THE BATTLE

Media coverage is overwhelmingly negative

• "Oh, for the good old days when Big Brother merely watched you. Soon, he'll be coming home with you in what you buy, wear, drive and read.” —Consumer Reports, June 2006

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LOSING THE BATTLE

Media coverage is overwhelmingly negative

• “At item-level tagging, you have actual linkage [to a consumer’s credit card information], since details of your purchase are archived along with your credit-card information and other particulars of your private life. Your details are even matched with those on file for your family and associates.” —Globe and Mail, July 2006

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LOSING THE BATTLE

Wired Magazine Calls Katherine Albrecht, founder of CASPIAN, RFID’s Erin Brockovich

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LOSING THE BATTLE

Consumers are listening• Spychips: How Major Corporations and

Government Plan to Track Your Every Purchase and Watch Your Every Move

•#1 on Amazon’s Movers & Shakers list

•#6 on Amazon’s Non-Fiction Bestseller list

•#15 on Amazon’s Daily Sales list

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INDUSTRY RESPONSE

• Created privacy guidelines

• Mandated a kill command

• Established a Public Policy Steering Committee

• Created a label required on tagged products

• Lent support to those opposing RFID bills

EPCglobal has:

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INDUSTRY RESPONSE

• Created a label for tagged products

• Begun developing best practices

• Produced an educational video

• Published a position paper

• Done media tours to educate journalists

AIM Global has:

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INDUSTRY RESPONSE

• Created best practices

• Lobbied against RFID bills

• Spoken positively about RFID in the media

• Supported AIM and EPCglobal initiatives

Other companies/groups have:

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INDUSTRY RESPONSE

• Retailers are afraid to discuss item-level trials going on

• RFID Journal could not get a single U.S. apparel company to speak at our recent Apparel & Footwear RFID Summit

• Companies are backing away from RFID

Item-level RFID is taboo

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INDUSTRY RESPONSE

These efforts are

FAILING!

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CAPITULATION!

American Eagle Outfitters:• “American Eagle currently does not use any

RFID systems, either in supply chain management, consumer credit card or loyalty programs, or anywhere else within our operations. We highly value and respect our customers’ privacy. The fact that a vendor may have offered a system demonstration should not be interpreted as an intention on our part to adopt such a system in future.”

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CONTRIBUTING FACTORS

How could this be?

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CONTRIBUTING FACTORS

End users shoot themselves in the foot• April 2003: Benetton is forced to issue a

press release backtracking on RFID plans after CASPIAN calls for a boycott

• Nov. 2003: Chicago Sun Times “exposes” secret trial by P&G, Wal-Mart

• Feb. 2005: Brittan Elementary School District in Sutter, Ca., is forced to drop plans to use RFID to take attendance

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CONTRIBUTING FACTORS

More RFID debacles . . .• Jan. 2004: Errant e-mail suggests GMA

wants to smear Katherine Albrecht

• Feb. 2004: Metro drops RFID loyalty card after CASPIAN exposes that it was using RFID without informing customers

• May 2005: State Dept. agrees to additional protection for RFID passports after uproar

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CONTRIBUTING FACTORS

• Enron

• WorldCom

• Global Crossing

• Parmalat

• Adelphia

Recent business scandals have contributed to a negative opinion of businesses

• El Paso Energy

• ImClone

• Cendant

• Sunbeam

• Royal Ahold

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CONTRIBUTING FACTORS

• The U.S. Patriot Act

• Tapping international calls

• Using SWIFT data on transactions

• JetBlue handing over passenger data

The war on terror has kept the issue of privacy and freedoms in the headlines

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WHY WE CAN’T BE COMPLACENT

• “We had many of the same [privacy] concerns with bar codes. They will go away when people get more comfortable with the technology.” —Auto-ID industry veteran

Will the problem go away?

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WHY WE CAN’T BE COMPLACENT

• The European Union requires labels on most genetically modified foods

• European consumers have generally rejected genetically modified foods

• The debate over genetically modified foods has led to an increase in sales of organic foods

What if it doesn’t?

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WHY WE CAN’T BE COMPLACENT

• What can the industry do to stop this?• Can we turn the tide of negative publicity?• Can we convince people that vendors and

end users are sincere about protecting their privacy?

• Can we convince people that RFID will deliver massive benefits to them, as well as to businesses

RFID may be the next “frankenfood”

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WHAT WE CAN DO

We have to try!

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WHAT WE CAN DO

• Sustained PR effort

• Consistent response to irresponsible media articles

• Education of journalists and other influencers

• Present a united front

It’s time to focus on the consumer

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WHAT WE CAN DO

• Form a small RFID Privacy Coalition

• Coordinate activities of AIM, EPCglobal, NRF, AAFA, etc.

• Sustain a PR campaign aimed at consumers

• Raise money to support the effort

• Hold events for journalists, influencers

• Get media savvy

How we can get this done?

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WHAT WE CAN DO

Get end users to commit to

truly protecting consumer privacy

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CONTACT INFORMATION

Thank you

Mark Roberti

Founder & Editor

RFID Journal

mroberti@rfidjournal.com