The majority of articles about Walmart's item-level tagging initiative have focused on the privacy issue, with titles like "Understanding Walmart's Bugging of Underwear," "Should You Worry About the Tags on Walmart Underwear," and "Are Walmart's Smart Tags an Invasion of Privacy." I was slightly disappointed by the lack of coverage of the business benefits. Having said that, as a supporter of privacy rights, I'm glad that there are voices expressing concern. I'm not sure where RFID ranks on the list of privacy threats that we are facing today, compared to, say, intelligence agencies increasing scanning of our online and voice communications, and other types of surveillance by both government and non-government entities. Furthermore, in the digital era, people often cede their own privacy, largely because they don't fully appreciate the public visibility of their various electronic communications, especially on social networks. People are putting their lives out for display on Twitter and Facebook.
Regarding RFID and privacy, the potential threat for abuse is real, even if sometimes overblown by privacy advocates. A good course of action for retailers that want to do item-level tagging is full transparency and disclosure, maintaining consumer anonymity by default, education, and providing the ability for consumers to opt-out. That means prominent notifications on what items are tagged, along with materials describing the program, rationale, and any benefits to the consumer. It means not tracking individual consumer's behaviors without their consent/opt-in. It means not embedding the tags in the item, but making it part of a separate tag that is thrown out. And explaining to the customer how to properly dispose or, if necessary, disable the tags after purchase. If the customer knows it's as easy as cutting up the tag with scissors, or if you provide them with tags designed to be disabled, they should be more confident that their privacy is not being compromised.
