BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1834| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 1834 Author: Bowen (D) Amended: 4/1/04 Vote: 21 SENATE ENERGY, UTILITIES & COMM. COMMITTEE : 6-2, 4/27/04 AYES: Alarcon, Bowen, Dunn, Murray, Sher, Vasconcellos NOES: Battin, Morrow NO VOTE RECORDED: McClintock SUBJECT : Radio frequency identification systems SOURCE : Author DIGEST : This bill addresses the privacy issues created by radio frequency identification systems. ANALYSIS : Current federal law prohibits video stores and libraries from sharing or selling customer records without first getting express consent from the customer. Current state law prohibits financial institutions from sharing or selling personally identifiable non-public information with unaffiliated third parties without obtaining a consumer's consent. Financial institutions have to provide people with an opportunity to "opt-out" of having their information shared with a marketing partners and affiliates. [SB 1 (Speier), Chapter 241, Statutes of 2003, which takes effect July 1, 2004.] Current state law prohibits stores with club card programs CONTINUED SB 1834 Page 2 from collecting driver's license and Social Security numbers on club card applications and prohibits them from selling or sharing personal customer information. [SB 926 (Speier), Chapter 586, Statutes of 1999] This bill prohibits any person or business from using radio frequency identification (RFID) tags on store products and from using RFID readers to collect personal information about people unless the following conditions are met: (1) the information is collected only to the extent permitted by law, (2) the information is provided by a customer in order to purchase or rent an item at a store, (3) no information is collected before a customer actually initiates a transaction to purchase or rent an item or after the customer completes the transaction, and (4) the information collected is about a customer who actually presents the item for purchase and only in regard to that item. This bill prohibits libraries from using RFID systems unless the following conditions are met: (1) the information is collected only to the extent permitted by law, (2) the information is provided by a library patron in order to borrow an item at that library, (3) no information is collected before a patron actually attempts to borrow an item or after the patron completes the transaction to borrow an item, and (4) the information collected is about a patron who actually attempts to borrow the item and only in regard to that item. Comment RFID tags are conceptually similar to, though much more advanced than, bar codes found on most products people buy and to the magnetic strips found on credit cards and driver's licenses. RFID tags are tiny electronic computer chips that can be placed, for example, on pallets of factory-sealed products to readily tell shippers the quantity, type, date manufactured and destination as they pass through warehouse doors that are equipped with an RFID reader (also called an antenna). The tags can be read from 25-30 feet away and at indirect angles, removing any need for a person with a SB 1834 Page 3 hand-held scanner to read the product. RFID tags are expected to replace bar codes on everything from library books to groceries within the next decade, allowing businesses to save millions of dollars by automating their shipping and inventory processes. At about 20 to 50 cents per tag and $1,000 per reader, RFID systems are still too expensive for widespread use. Some experts project, though, that as demand grows, manufacturing costs will drop and within the next decade the use of RFID technology will become much more prevalent. NOTE: For a detailed discussion of the uses of RFID technology and the focus of current law information collection and tracking practices, please refer to the Senate Energy, Utilities and Communications Committee analysis. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 4/28/04) --- OPPOSITION : (Verified 4/28/04) California Chamber of Commerce California Grocers Association Consumer Specialty Products Association Grocery Manufacturers of America ARGUMENTS IN SUPPORT : The author's office argues that the bill is seeking to address concerns about the privacy and civil liberty issues raised by RFID technology. ARGUMENTS IN OPPOSITION : Opponents argue that the use of RFID technology is growing, but not widespread and they feel the bill is premature. NC:mel 4/28/04 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE SB 1834 Page 4 **** END ****