DHS Nears Decision on Embedded Chips in Drivers' Licenses

The Department of Homeland Security (DHS) will soon make a decision that could threaten the pocketbook and privacy of every American. The agency is considering requiring all drivers’ licenses to be embedded with computer chips, which will be more costly and less secure than upgrading the existing technology for licenses.

Passed in May 2005, the Real ID Act for the first time set federal standards for authenticating and securing state-issued driver’s licenses. DHS, which has no previous experience in making ID cards on a massive scale, is charged with setting forth the regulations to implement the new requirements. While states technically are not forced to accept the federal standards, any refusal to comply would mean their residents could not get a job, receive Social Security, or travel by plane. Although Real ID was tucked into a massive spending bill and passed without any congressional debate, it is clear that Congress intended DHS to base its regulations on the states’ best practices.

DHS has two options for licenses: Magnetic stripes or two-dimensional (2-D) bar codes; and contact-less integrated circuits such as Radio Frequency Identification (RFID) technology. Whichever alternative is used -– “2-D” or “3-D” technology -– the new system will place a heavy burden on state and local governments, especially departments of motor vehicles, as well as on taxpayers and drivers. States will now have to verify birth certificates, federal immigration documents, and Social Security numbers with the appropriate federal departments, build a database to store and secure identification documents, and train personnel to use the new system. Fees and taxes will have to be increased to cover whatever costs are not paid for by the federal government.

Computer chips are by far the more expensive of the two options. Citizens Against Government Waste examined the issue in its October 2005 report, "Real ID: Big Brother Could Cost Big Money." The total cost of issuing new licenses with embedded computer chips to 196 million drivers could reach $17.4 billion, or $348 million per state. The average cost of a license would shoot from between $10 to $25 to more than $93. 3-D technology could be even more expensive than estimated because computer chips are flimsy and would need to be replaced more frequently than non-chip licenses.

Even more troubling than the financial cost is the potential invasion of privacy. RFID chips have the memory to store every detail about a person, including health records, family history, bank and credit card transactions. RFID chips can also be remotely accessed by a hand-held scanner, raising the risk of identity theft. Non-chip licenses have to be physically stolen and then read.

DHS is not facing a question of cost versus security. Currently, 49 states use either magnetic stripes or 2-D technology and have had minimal identity theft problems. States have been making substantial progress in securing and authenticating drivers’ licenses with innovations such as holograms and digital watermarks. No state currently uses chips in its licenses. A 3-D mandate would force some states to shelve millions of dollars of investment into their own security solutions and start from scratch.

The National Conference of State Legislatures (NCSL) estimates that upgrading existing technology would cost about half as much as CAGW’s $17.4 billion cost estimate for computer chips. At a recent NCSL seminar in Chicago, many of the speakers and attendees expressed concern that the DHS would adopt RFID chips. In May 2005, the California state Senate passed legislation that would prohibit the use of chips in drivers’ licenses and several other forms of identification.

RFID technology is useful and appropriate for applications such as cargo and automatic tolls. But requiring an embedded chip in every driver’s license is a terrible idea. With the government’s long history of technological ineptitude, the task is daunting and invites all manner of snooping, theft, and abuse. DHS should keep costs and technology difficulties to a minimum by choosing to use cost-effective and proven methods that are being used in most states today.