Regulation of Retail Use of RFID Tagging

The Entertainment Merchants Association (EMA) opposes efforts to limit the use of radio frequency identification (RFID) tagging in the retail environment or require special procedures to be implemented if RFID tagging is utilized in retail establishments. Such mandates would create disincentives for widespread adoption of RFID tagging, which has the potential to improve supply chain management, reduce shrink, and improve customer service.

The "Electronic Product Code" RFID tags utilized in the retail supply chain are like electronic barcodes. Unlike RFID tags used for tolls and mass transit, the tags have no internal power supply and are not constantly activated; rather, a reader is used to send a signal to an antenna embedded in the tag, which provides a burst of energy to the tag and allows it to respond. These tags can be read at distances ranging from a few inches to several yards, depending on the frequency used and the size of the antenna.

RFID tags are used at the case- and item-level in retail supply chain management to provide an accurate report on inventory and its location. They can track products as they move from the manufacturing facility, through distribution centers, to retail establishments, and ultimately into the hands of the consumer. RFID tags improve the ability of product suppliers and retailers to know how much inventory is on hand and where an item is in the supply chain, improving on-shelf product availability. The tags can reduce shrink (product loss) by eliminating the potential for discrepancy between inventory records and physical inventory and preventing the unauthorized removal of products from warehouses and retail establishments.

By providing retailers with real-time information on each unique item in their inventory and its location, RFID tags will improve customer service. Retailers will be able to inform customers whether they have the particular item the costumer is seeking and where it is in their store, even if the item is mishelved. The improved item tracking offered by RFID can be used to alert retailers when product supplies are running low and when it is time for replenishment, thus reducing the potential for customer frustration due to product shortages.

Legislative proposals to require RFID tags to be removed or deactivated at the time of purchase or to restrict post-sale communication with RFID tags are both impractical and unnecessary, as, much like barcodes, RFID tags are part of product packaging. In addition, because of the passive nature and limited range of Electronic Product Code RFID tags, the tags are not designed for communication outside of the supply chain.

EMA supports accepted industry guidelines for retailers to provide notice regarding the presence of RFID tags in their establishments.  However, since the industry has already agreed to provide such notice, EMA believes legislation is unnecessary.

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