BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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                                 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  
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          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  







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          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







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