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Start a Privacy Dialogue

RFID tags are on few, if any, consumer items now, but manufacturers and retailers need to begin talking about the technology's privacy implications with customers.
By Bob Violino
Apr 20, 2004—We live in a world that’s increasingly sensitive to privacy issues. Just the appearance of a privacy breach can erode trust in your company and respect for your brand—and cause a drop in your stock price. A series of privacy breaches by retailers, even in tests, could slow RFID technology’s deployment and lead to complex and costly
regulation. With that in mind, here are steps you should take today to address privacy concerns.

Don’t underestimate the concerns. Privacy issues are not the invention of a small group of extremists. Many people are sensitive to what personal information is gathered about them and how it’s used. Polls show that privacy is consistently one of the public’s top issues. And policymakers will act if they think public concerns are being ignored.

Strike a balance. The question is not one of either using RFID or respecting customer privacy. It’s a question of striking the right balance between achieving business goals and respecting customers’ rights. Most consumers are not interested in the technology itself but in the benefits that it might bring, such as having a better selection of goods or easier warranty procedures. The more you demonstrate the benefits for your customers and a respect for their concerns, the more positive their reaction will be to the use of RFID.

Consider RFID as a part of an overall privacy policy. Companies have been dealing for 20 years with issues surrounding what data they collect, how they use it and how they keep it secure. Leading companies have adopted some core principles: Notify people about what personal data you are collecting; tell them how you will use it; get their consent; and keep the data secure. These principles are also embodied in laws that may apply to your company. Learn from what has worked in the past and include these principles in your RFID plans.

Turn the issue into an advantage. Adopting an aggressive privacy program may impose costs, but companies that have done so with Web sites have found that their customers are appreciative. Procter & Gamble, which has a well-developed privacy program regarding all the customer data it collects, has found that customers who say it’s OK to use their information are more loyal.

Start the dialogue today. It’s important to discuss privacy with customers and consumer advocates. Customers will tell you what they expect. Consumer advocates can provide valuable advice and alert you to weaknesses in your policy. These are the people who are going to be raising the issues publicly, so they are the ones you need to listen to.

Your policy doesn’t have to be set in stone. RFID technology is evolving, and privacy policies will evolve with it. But the basic principles of notice, choice and data security don’t change. It’s not too early to begin the dialogue. Companies that ignore these issues or wait too long risk winding up the subject of negative media attention, damaging their relationship with their customers, triggering unwanted regulations or having to make costly revisions of IT systems. Which choice will you make?

Elliot E. Maxwell is a fellow of the Center for the Study of American Government at Johns Hopkins University and the chairman of EPCglobal’s International Policy Advisory Council. These views are his own.
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