This post was written by Frederick Lah.

Wal-Mart’s decision to put radio-frequency identification (RFID) tags on individual clothing has bothered some privacy advocates. Previously only used by the company in its warehouses, Wal-Mart is expanding its use of the tags with the aim of reducing loss and ensuring shelves are optimally stocked. Further down the road, a full implementation of RFID could potentially do away with checkout lines as the sale of RFID-enabled products can be completed with one quick scan of all items in the cart.

The privacy concerns with RFID technology are nothing new but have been elevated with the technology now entering into customer households. RFID tags store unique numerical identification codes that can be scanned and potentially tracked from a distance. Though the tags can be removed, they cannot be turned off. Privacy advocates are worried that the expanded use of the technology would allow retailers to track movements throughout the store of customers carrying driver’s licenses that contain RFID technology (e.g., Michigan, New York, and Washington). The concern is that retailers could scan data from such licenses and their purchases, and combine the information with other personal data, and then be able to know the person’s identity the next time they enter the store. There are also worries that unscrupulous marketers would be able to drive by customers’ homes and scan their garbage to learn about their buying habits. Wal-Mart insists that the tag doesn’t collect customer information and that they are using the technology strictly to manage their inventory. Wal-Mart also plans to educate consumers with the new implementation through in-store videos and signs posted in their stores.

According to the Wall Street Journal, Wal-Mart’s broad adoption of the tags is the largest in the world. With Wal-Mart being one of the most influential retailers in the world, a successful implementation of the technology could lead to other merchants following its lead. Several other retailers including J.C. Penney and Bloomingdale’s have already begun experimenting with electronic tags and numerous European retailers have embraced the technology as well. Those clients interested in using RFID tags should consider both the benefits and privacy risks before implementing the technology.