Privacy loophole needs stitching

Privacy fears surrounding new barcode technology, which is designed to track inventory and improve supply chain efficiencies in the retail, freight and transportation industries, could stall its widespread use in Australia.

Accenture predicts auto-ID technology, which combines electronic product codes and radio frequency identification (RFID) is set to save organisations billions of dollars a year by reducing inventory costs, retail theft and more effectively forecasting supply and demand as well as substantially lowering labour costs.

However, law firm Clayton Utz is already warning companies that the tracking technology could be used for data harvesting and act as an identifier for unsolicited advertising and should be part of a review of the Privacy Act later this year.

National coordinator of the privacy practice at Clayton Utz, Mark Sneddon singled out fashion label Benetton which has woven the tracking technology into its clothing. By embedding RFID into products the wearer has a unique ID that can collect information about the buyer.

"Not only can information about you be collected as you walk through a shop or down the street, this technology makes it theoretically possible for information about an individual's possessions to be collected at work, in a cinema, at a sporting event or on public transport; a great deal can be inferred for marketing purposes and presently the Privacy Act only covers data handling practices," Sneddon said.

The Act doesn't cover this type of data collection because it is not connected to an individual but Sneddon said it can be linked to credit card purchases.

Speaking to Australian customers on auto-ID technology this week, Accenture's managing partner for global retail and consumer industries, Jeffrey Smith, acknowledged privacy fears could stall its use here although it is already being used in North America and Europe and the scope for improved business efficiencies are huge.

He said the challenge is to inject common-sense into an "emotional, non-factual debate" and as a participant in a global Auto-ID Consortium that includes Australia, steps are being taken to address privacy concerns.

The consortium has its own privacy taskforce and Smith recommends an opt-out solution for consumers that is no different to loyalty cards and other programs.

"The value proposition to the buyer is that they get special offers by allowing information to be collected; the reality is millions of consumers carry RFID technology to undertake transactions in the form of debit cards," he said.

While multinationals such as Unilever and Coco-Cola are actively using this technology, Smith said local interest is growing rapidly and the IT implications are huge.

"Interest is being driven by the marketing, supply chain and logistics departments so the challenge for the IT executive is to make sure he is invited to these meetings because it is a big integration issue for IT," he said.

The retail industry is transforming in-store networks to wireless LANS and the introduction of electronic product codes (EPC), which cannot be implemented with any packaged software available from vendors, has to be standardised and integrated as part of a project that can take up to 18 months.

Accenture predicts the RFID application market will expand to almost $US7 billion by 2008.

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