New research from the Kelley School of Business at Indiana University highlights the need for industry to set better standards for protecting consumers’ private information — or else risk having the government impose its own regulations.
Technologies such as Radio Frequency Identification (RFID) are drawing questions about consumer privacy. Stores use RFID tags to track inventory and reduce shoplifting. However, privacy concerns are raised when retailers don’t disable the tags once customers purchase the items. Kelley professors Julie Manning Magid, Mohan V. Tatikonda and Philip Cochran warned of the risks involved in an article in the American Business Law Journal. Magid stated in a press release:
More companies are realizing advances in the ability to link products and consumers through the use of technologies such as RFID, but such progress can sometimes come at the expense of individual privacy. For RFID and other such technologies to thrive, industry self-regulation that directly addresses the issue of personal privacy threats is far preferable to piecemeal and potentially oppressive government regulation.
Three rules for using RFID technology
The authors outline three standards for industries to adopt regarding RFID technology, though they say that the recommendations work for other technologies as well:
- 1. Do not use technology to collect highly sensitive information such as Social Security numbers.
- 2. Impose “expiration dates” on data, discarding it according to a specified timeframe.
- 3. Ban selling of information to third parties.
Magid believes that RFID and other technologies are good for both consumers and businesses but must be used carefully:
Although this innovative technology can increase consumer choice and reduce costs, companies must be cognizant of the danger the technologies pose and should take proactive steps to address and mitigate these risks to consumer privacy.
RFID image courtesy of Flickr user midnightcomm, CC 2.0
