High-tech tracking devices raise concerns on privacy

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Wal-Mart's plan to track shipments from its suppliers to its stores using high-tech tags will go into effect Saturday.

More than 100 suppliers will adhere to Wal-Mart's mandate to place radio frequency identification -- or RFID -- tags on cases and pallets going to 150 Wal-Mart and Sam's Club stores in northern Texas and south-central Oklahoma.

"They're ready, we're ready; there is no need to wait," said Carolyn Walton, vice president for Wal-Mart's Information Systems Division. "I sometimes get the feeling that people think we are going to flip some gigantic switch on January 1st and tagged cases and pallets will appear from more than 100 suppliers."

The suppliers have been upgrading their systems gradually to comply with Wal-Mart's mandate since the retailer announced its plans in June 2003. In April, Wal-Mart started the pilot program with eight suppliers, one distribution center and seven stores in Texas.

Many of the suppliers won't be tagging everything they send to the three distribution centers next month, but Wal-Mart officials say the participation it is receiving is a good start. The mega-retailer plans to expand the technology to more stores in other markets next year.

Wal-Mart, as the world's largest retailer, is in a powerful position to drive the technology into widespread use. The industry is watching and waiting to see whether the program is a success and whether it will need to scramble to catch up. Other retailers, such as Target and Albertson's in the United States and Metro and Tesco in Europe, also have been testing RFID technology.

But privacy advocates are concerned the technology will open the door to allow retailers to "follow" merchandise from the store shelf into a customer's home.

"What Wal-Mart's involvement has done is make this technology real," said Katherine Albrecht, founder and director of Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), an industry watchdog group. "These corporations using RFID are playing with a dangerous technology. It has the potential to eradicate our privacy."

The tags use the same technology found in the E-ZPass, which allows motorists to go through tolls, and "smart ID" cards, which give employees access to their offices. The airline industry is considering tagging to reduce the amount of lost luggage.

The technology allows retailers and other businesses to track items wirelessly through radio signals.