Imagine home buyers driving through their favorite neighborhood, checking out for-sale signs. As they approach one sign with curiosity, they use a device with an RFID chip that beams a bar code-like ID on the for-sale sign. Instantly, the buyers can see a full display of the listing on a PDA along with other important neighborhood information such as schools and recent home sales.

Unfortunately, the hottest new technology is becoming too hot for some companies to touch because of privacy concerns, which might delay applications like the real estate example from happening anytime soon. RFID, which stands for radio frequency identification, was to be the ultimate technology for tracking consumer behavior, and consumers generally for that matter.

RFID tags are microchips, which are as small as a dust mite, that detect radio frequencies. They listen for a radio query and respond by transmitting their unique ID code. Most RFID tags have no batteries.

Retailers are installing “smart shelves,” which track your product purchase, which also has an RFID tag. Imagine that on Saturday you buy a lawn mower from Wal-Mart. When you check out, the tag on the mower corresponds to your credit card, and on Tuesday you get a pitch from the Big W for a rake.

Alien Technology of Morgan Hill, Calif., produces the RFID tags and sells them for about 25 cents. You can imagine a day when RFID tags, which deploy a 64-bit unique ID with 20 thousand trillion varied values, are used for all products and services.

Government agencies are expected to deploy RFID on paper money to keep track of drug runners, money launderers and counterfeiters. The privacy advocates have had a field day with the RFID idea, criticizing it as the worst form of Big Brother. Hearings have already been held in California and regulators are expected to investigate how it is used and set rigorous rules for its application.

The efficiency and the consumer benefits should not be underestimated, helping with inventory control and giving mobile consumers instant information. However, the privacy issues enter the picture when the consumer leaves the store or finishes a home search with someone monitoring his or her behavior. Imagine this technology in the hands of a disgruntled spouse or divorce lawyer. MIT engineers are working on a technology that would give the consumer the power to turn off the tag once after they leave the store or finish a home search.

For real estate applications to take hold, the technology must be improved. Current RFID tags have a range of only 15 feet. Another firm producing the tags is Matrics of Columbia, Md., which says it has the most loaded and smallest tag.

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