Jul 15, 2009

Pay by Touch and John P. Rogers

Chuck Missler
By Chuck Missler

Technology junkies and privacy enthusiasts have both anticipated the day when society could go "cashless" – with different views on the matter. On the one hand, it's pretty nifty to pay for lunch with just a swipe of your thumb. On the other hand, your wallet cannot be hacked by a teenager in Korea.

The technology is absolutely available right now to remove cash from the pockets of most of the world populations. The world populations, though, still enjoy the freedom of dealing in real, tangible dollars and cents. As time progresses, however, our dependence on digital money keeps growing. While there are still plenty of obstructions in the way of going truly cashless, it may not take much to get those moved out of the way.

School Lunches: Finger-scanning technology is now commonplace in America's schools. Students no longer have to go hungry because they forgot their lunch money. Kids just swipe their fingers to pay for their food, and parents get a bill at the end of the month. Administrators can avoid the time and cost of replacing ID cards, and the finger scanners help prevent fraud, since kids have to use their own finger; they can't just borrow some other student's ID number.

Of course, the transition to finger-scanning has not come without controversy. Parents and privacy advocates have been regularly concerned about the protection of students' personal information.

Those with privacy concerns are often comforted by the knowledge that these school databases do not actually store finger prints. The scans identify a number of specific points on a student's finger and creates a binary number based on the data. That number is then linked with the students' ID number. No fingerprints are actually collected. Schools everywhere are hopping onto the finger scanning wagon with relish.

Young people are far more used to using their fingerprints as their ID than adults are. Companies like IdentiMetrics offer schools many biometric applications, from using finger scans to take attendance or borrow library books, to making sure students are getting on the correct bus. Getting the next generation to pay for everything by fingerprint will not be a difficult task.

Going Cashless: We already use electronic transactions for most of our daily business in America. Not only do we buy more than 65 percent of our groceries with a card, we also pay most of our bills online. Just 15 years ago, most people paid their bills by sending checks through the mail. That's changed. From 1995 to 2003, the number of electronic payments rose from 15 billion to 44 billion, according to Federal Reserve estimates.

Pay-By-Touch and John P. Rogers: When our money changes hands through electrons rather than dollars and cents, we have far less to fear from common thugs who steal our wallets. However, as we depend more on electronic transactions, we have more to fear from cyber thugs who can steal our entire lives' savings. The security of our digital money depends on the level of security offered by the companies behind these systems, which can ultimately depend on the character of the employees and ownership of those companies. Most of the time we assume these companies do a good job, but there are always the unseen variables to consider. Variables like John P. Rogers.

In 2005 and 2006, headlines constantly described a new system of paying by finger scan at grocery stores. A number of grocery store chains offered finger-swiping as an option to debit a customer's checking account. We don't see those headlines anymore. Pay By Touch, the front-runner company selling this technology, ended up bankrupt and shut down on March 19, 2008 without notifying its customers.

It turned out the man behind Pay By Touch, John P. Rogers, was a charismatic salesperson but also a wildly irresponsible man who wasted millions of dollars in venture capital through partying and high living. The assets of Pay By touch were auctioned off, and finger swiping at grocery stores has temporarily gone extinct.

John P. Rogers did not, apparently, sell any customer's digital information to criminals - but it's conceivable that he could have. He didn't take off to some remote Pacific island with the personal data of thousands of grocery store customers... but it's conceivable that he could have. John P. Rogers was not an honest businessman, and his customers in 2008 had no clue that his company was about to go bankrupt. There's no telling what he could have done.

John P. Rogers makes a very powerful point about the reality of technological systems; there are human beings behind them. These human beings may be excellent workers bent on doing a great job for their customers, or they may be dishonest or ruthless or desperate. We just need to keep that in mind as we speed headlong into a culture of cyber-pay.

Back to School Lunches: Conservative politicians in Wales are now arguing that finger-swiping needs to be done away in local schools because security experts working for the government managed to hack into school databases. The biometric data stored in the schools' computers is rudimentary, but some are concerned that data can indeed be reconverted into a real fingerprint.

North Wales Assembly Member Mark Isherwood is concerned that schools could be hacked and the data compromised.
"In future, fingerprint templates will be used to authenticate passports, bank accounts and so on," Isherwood said. "Biometric templates are extremely valuable and need to be kept in a highly secure environment."

He added, "In addition, fingerprint templates can be used to link different databases rapidly and to build up a disturbingly accurate profile of an individual without their knowledge or consent. We do not want that for our children."
Criminologist Professor Michael Levi, of Cardiff University is far less concerned; he doesn't see school lunch data as being of high value to hackers.
"We all have to worry about what might happen to our data, but I would be far more worried about News International hacking into my phone than about this sort of thing."
Yet, the issue isn't really whether the data could be used right now. The question is whether or not the data might be useful to criminals in a few years when Johnny and Susie grow up.

Too Much Cash?

Right now we are free to pay by paper or plastic as we see fit, but even that freedom is eroding. As we depend less and less on physical money, the very fact that we hold cash in our hands can arouse the suspicion of authorities. Steven Bierfeldt, treasurer for the Campaign for Liberty, was detained at the airport in St. Louis because he was carrying $4,700 in a lock box. TSA wanted to know what the money was for. Was it any of their business? No. The police were beckoned to the scene, and they threatened Bierfeldt with arrest because he wanted to know if he was required by law to answer their questions.

Steven Bierfeldt was not carrying drugs or guns or the photos of Italian hit men. He was not even carrying an inordinately large sum of money, like $500,000. Bierfeldt, the treasurer of a political organization, merely had $4700 in cash in a lock box.

We have driven a long way from the gold and silver standards, when our paper money was actually backed by something real. Today we don't even bother with physical money at all. As we depend ever more on computers to handle our finances, we place ourselves in a precarious situation in which we are dependent on those people who run the electronic financial systems. If those people should ever gain too much power, or grow too ruthless, we may long for the days when when we had to hunt for a stamp to pay a bill, the days when the cashier accidentally dropped our pennies on the floor when handing us our change.

Related Links

Biometric Student ID: Practical Solutions For Security in Schools - identiMetrics
Fears That Fingerprint Scanning System In Schools Could Leave Children’s Data Vulnerable - Western Mail
How 'Visionary' Raised - And Lost - A Fortune - The San Francisco Chronicle
Modern Threats To American Liberty - ZDNet
The Cashless Society Has Arrived - Real Clear Politics