Can your razor blade spy on you?

Each year, businesses lose billions of dollars in inventory that simply disappears. While thieves account for some of the loss, a second category has troubled company executives more - merchandise that vanishes into a faulty record-keeping system. A technology called RFID, "Radio Frequency Identification," could put an end to such confusion.

Proponents of the technology have described it as a next-generation bar code, sure to ease inventory control and lower costs. Eventually, RFID tags could end up on everything from razor blades and books to clothes that send cleaning instructions to your washing machine.

But privacy advocates and civil libertarians say the technology designed for tracking widgets at a very short range can easily be adapted to tracking and spying on people, just as software "cookies" now track computer users' movements online. And as some of the world's largest companies prepare to shift their record keeping to the new model, there's a growing debate as to how - or whether - it should be regulated.

"We're at the very beginning stages of the uses of this technology, so it's not entirely clear how it will be used," says Deborah Bowen, a California state senator who may propose RFID legislation. "My general inclination is that it's better to design in safeguards before there's widespread deployment."

RFID depends on two components: a tiny transponder, or "tag," that includes a computer chip and radio antenna, and a reader. While a bar code must be scanned with a laser, the RFID tag only needs to pass near a reader, as far as several feet away. Already in use in toll routes and electronic door locks in the US and abroad, the reading device fires a burst of radio waves that turn the tag on. In turn, it transmits its data back to the reader. The data is then passed to a computer.

In a store or warehouse, the tag can transmit information such as product type, cost, and age. The information might prompt the computer to order new inventory. But privacy advocates worry it might be only a small step from tracking merchandise with RFID devices to tracking the people who buy the merchandise.

"The radio signature of an RFID tag could be identified with a person," says Beth Givens, executive director of Privacy Rights Clearinghouse, an advocacy group based in San Diego. "The potential for surveillance is very real."

The technology is well suited to a cultural shift now taking place in developed nations, says Jerry Kang, a visiting professor at Harvard Law School. He calls it "pervasive computing."

Professor Kang envisions a world in which computers and information technology are woven even more seamlessly into daily life. For instance, mobile telephones might soon include global positioning capabilities and RFID, he says, so one could track friends and family or get help fast in an emergency. But as the technology advances, there could well be a tradeoff in privacy in exchange for such convenience, he adds.

"The real reason stores don't track us now is that they can't," Kang says. "If they could invisibly place an Internet-style cookie on us and keep track of where in the store we browse and for how long, they would. Amazon.com does a lot of database marketing right now. Even if you're not buying anything, they know who you are and they're collecting data on what you look at. [With RFID] it's quite possible for other stores to do that too."

However, many of those involved in developing the technology are skeptical. "Is it possible? Yeah. Could my students build something like that? Yeah. Is there a business value to it? I don't think so," says Sanjay Sarma, research chair of the Auto-ID Center, the consortium based at MIT in Cambridge, Mass., that developed RFID. "Is it going to be economically feasible? I don't think so."

One issue, Mr. Sarma says, is the carrying distance of today's RFID signals. The cheapest tags have no power source of their own and typically can only communicate with a reader over a few inches or, at most, a yard.

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