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State Legislatures Address Use of RFID Technology

Excerpt from: "News From the States," Communications, Technology
and Interstate Commerce Committee Newsletter, Summer 2004

     Radio Frequency Identification (RFID) technology can be thought of as a next-generation bar code.  A simple RFID tag consists of a microchip and antenna which when stimulated by a remote "reader" sends back information via radio waves.  Like a bar code, an RFID tag identifies the product it is attached to for inventory or purchasing purposes; but an RFID tag can do even more.  For example, the microchip can hold information related to the expiration date of the product, so a "smart" refrigerator could warn you that your milk is old before you even take a drink.  Further, by employing a series of readers, an RFID-tagged product can be tracked as it moves in commerce. In more advanced and expensive applications, the RFID tag can not only be read, but can also be written to, so that for example, when combined with other sensors, RFID tags can record whether the product has been exposed to radiation, or excessive heat.  As both the size and cost of RFID tags have decreased, their use has become more widespread, but paradoxically less noticeable–RFID tags are now about the size of a grain of sand.

     Privacy concerns arise when information in RFID tags is combined with personally identifiable consumer information and used to track an individual's purchases, movements, and other behavior.  In some cases, like the EZ-Pass system, the RFID tag identifies the consumer directly and therefore identifying and recording the consumer's behavior is inherent in the transaction.  The advantage of such a system is that paying a toll can be seamlessly accomplished at 45 m.p.h., but the privacy concern is that information collected by the system could be used to monitor the movements of the individual.

     Legislators in several states, recognizing privacy concerns about the use of this technology, have introduced bills that seek to respond to the increasingly rapid adoption of RFID technology.  Three states–Maryland (H.B. 32), Utah (S.J.R. 10) and Virginia (H.B. 1304)–have introduced bills designed to study the issue in more depth and to provide recommendations for future legislation.  Two states–Missouri (S.B. 867) and Utah (H.B. 251)–have introduced legislation that would require all products containing RFID tags, to be appropriately labeled.  Utah (H.B. 314) has introduced another bill that requires instructions to be provided on how to disable the RFID tag, or a notice that the tag will remain active after purchase.  Finally, California (S.B. 1834) has introduced a bill that outlines when it is permissible to use or record personally identifiable information in the context of an RFID transaction.  Three states–New York (A.B. 6073), Virginia (H.B. 151, S.B. 107, S.B. 148) and Washington (H.B. 1019)–also have introduced bills that make personally identifiable information collected by automatic toll systems (like EZ-Pass) confidential.

     On June 21, 2004 the Federal Trade Commission hosted an all-day workshop in Washington, DC on the future of RFID technology.  The FTC's workshop explored current and anticipated uses of RFID as well as the associated consumer privacy and security concerns.  Brit Wood of the Retail Industry Leader's Association noted that the retail industry is excited about the new technology because it allows retailers to cut down on in-store safety stock and may lead to a reduction in product theft.  Dr. Paul Rudolf, a senior advisor with the U.S. Food and Drug Administration, suggested that his agency is looking at RFID as a solution to combating counterfeit drug distribution within the U.S.  Privacy advocates, while appreciating the benefits RFID holds for consumers, took issue with the type of information RFID technology can track.  Deirdre Mulligan, a professor at the UC-Berkeley Boalt Hall School of Law, expressed concern that RFID technology currently in place in public libraries to help keep better tabs of books could also be used to identify patron reading interests.

By Joshua Nelson and Nick Steidel

Contacts for Additional Information:

Federal Legislation: Nick Steidel nick.steidel@ncsl.org 202-624-5400, ext. 8673

State Legislation: Pam Greenberg pam.greenberg@ncsl.org 303-364-7700, ext. 1413