Using radio frequency identification (RFID) devices to collect personally identifiable information raises novel privacy issues that Congress needs to immediately address, public advocates told a U.S. House subcommittee Wednesday.

While acknowledging the potential value of RFID to business and government, officials from the Center for Democracy and Technology (CDT) and the American Civil Liberties Union (ACLU) recommended baseline legislation to cover any digital devices collecting personally identifiable information.

''Experience has shown that when new information collection techniques are deployed, consumers want to know specifics about what and how data about them is being gathered,'' Paula J. Bruening, staff counsel for the CDT, told the Commerce, Trade and Consumer Protection Subcommittee.

RFID tags are small computer chips connected to miniature antennae that can be placed on physical objects. The chips have enough memory to hold unique identification codes for all manufactured items produced worldwide. Separate RFID readers allow retailers to quickly read the tags to streamline the shipping and inventory process.

With major retailers such as Wal-Mart and Proctor and Gamble starting to deploy RFID technology at the pallet and case level, privacy advocates anticipate the next step will be to put RFID tags on individual items, raising the specter of retailers tracking the movement of purchases once they leave the store.

''Using RFID tags in pallets to assist distribution processes and inventory control does not raise major privacy concerns,'' Bruening said. ''But as soon as RFID tags are directly related to individual product items, it will be extremely important that consumers clearly understand that the technology is in use, what information is being collected, how it is collected and how it is used.''

Barry Steinhardt, director of the ACLU's Technology and Liberty Project, told the lawmakers RFID devices promise new efficiencies and conveniences, but also hold the danger for ''Orwellian'' privacy violations.

''RFID tags enable remote, even surreptitious identification. Their use generally requires the creation of databases containing identity information and RFID use is easily integrated into database systems and other technologies,'' Steinhardt said.

He added, ''Congress must act to lay to rest the privacy fears surrounding this technology so that it will be smooth sailing for us all to enjoy its benefits.''

Linda Dillman, Wal-Mart's CIO, told the panel her company plans over the next two years to focus on case and pallet tagging, although there will be instances where RFID tags are applied directly to individual items.

''Opponents to this technology are wrong for two reasons. First, the technology does not exist for a retailer to drive through a neighborhood, 40 feet from a home and read passive RFID tags.'' Dillman said. ''Second, and more importantly, there is no desire on the part of retailers to be able to do that.''

In addition, Dillman said, no personal information can be collected because RFID tags track only electronic product codes (EPC).

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