Wal-Mart's Privacy Invasion—Not!

AP

Horrors! Wal-mart, that world-whipping Darth Vader of retailers, is ushering in the next great chip revolution, and the Cassandras of the privacy movement already are arming to fight against it. (How’s that for mixing movie and mythology metaphors?)

Their biggest fear: Wal-mart wants to track your panties purchases.

A prescient story on Page One of the Wall Street Journalthis morning sets the stage for the next great privacy fight. Wal-Mart is rolling out item-level RFID tags—radio-frequency identification chips attached to individual product packages which emit wireless signals to let retailers track delivery schedules, volumes, inventory replacement, in-store theft and a plethora of other real-time data points.

One day RFID tags will permeate the U.S. and global economies, cutting costs for manufacturers and retailers and letting them better respond to consumer tastes. A whole new stock-sector boom could loom as well, in companies that cash in on this inevitable tech trend.

That is, unless the Privacy Police gets in the way.

One worry is the chip enables de facto surveillance—of your shopping bag as you stroll through a store, of the garbage can outside your home after you remove a new shirt’s tags and throw them away, heck, of your BootyPop derriere if the RFID tag stays in place.

“There are a lot of corporate marketers who are interested in tracking people as they walk sales floors,” one privacy prude ominously warns The Journal.

Um, so what is it I should fear that Wal-Mart will do with this new data horde showing that I just bought a pair of boxers? (Alright let’s stipulate: We’d be less keen on Wal-Mart’s knowing we just bought Spanx.)

The privacy guys always do this—raise well-intended but fear-provoking possibilities at the advent of most any new, promising technology. It is part of what the 1990s Internet sage, Nicholas Negroponte, called the “demonization of bits.” If a salesperson follows us around a store watching our purchases, fine; but use technology to do it and suddenly it’s Orwellian.

Playing the privacy card seems a bit antiquated in this exhibitionistic era of gleefully revealing your inner-most foibles and fetishes to potentially millions of other equally indiscreet folks on Facebook.

Consumers always have willingly, and willfully, sacrificed a little bit of privacy to get a lot more convenience, and they will do so again as the RFID wave sweeps across the economy. American Express already knows thousands of details about our purchases, and so far it’s difficult to recall any case of anyone truly hurt by any of this.

But this is the Age of Obama, where regulators act preemptively (and prematurely) to try to head off something that might go wrong rather than wait to deal with a problem once it emerges. So the tech industry must preempt the Obama Posse. Adopt industry-standard designs that blur personal details in favor of trend analysis and blind inventory tracking; embrace a code of ethics and issue a self-critical annual assessment of successes and failures in living up to it.

In other words, pull a Sipowicz—get out in front of this. And keep the Privacy Police at bay.

• CNBC Consumer Nation Blog
• When Will Consumers Start Spending Again? Try 2013

Editor's Note: In an earlier version of this post the description of the RFID acronym was incorrect. This has been corrected in this updated version.

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