- VeriChip Corporation, the much-hated purveyor of the
VeriChip human ID implant, is airing its dirty laundry this week. This
is not by choice, mind you, but because the Securities and Exchange Commission
(SEC) required the company to disclose its "risk factors" prior
to launching its initial public offering of stock (IPO) Friday.
- The company lays out nearly 20 pages of risk factors
in its Form S-1 Registration Statement, a required document for the IPO.
But what the company failed to reveal in its filing may be even more eye-opening,
say CASPIAN privacy advocates Dr. Katherine Albrecht and Liz McIntyre.
The pair, authors of the "Spychips" series of books, have been
vocal critics of VeriChip, dogging the company in recent years and facing
down its senior executives on radio and national television.
- "Potential investors should be told how a hacker
can simply walk by a chipped person and clone his or her VeriChip signal,
a threat demonstrated by security researcher Jonathan Westhues months ago,"
says McIntyre, who is a former federal bank examiner.
- "Omitting the cloning threat from its SEC documents
is a serious oversight that could affect the value of VeriChip's stock.
This is materially relevant information, considering VeriChip's claim that
its product could be used to tighten security in facilities like nuclear
power plants," she adds.
- (For more on VeriChip's vulnerability to hacking, see
"The RFID Hacking Underground,' Wired Magazine, http://www.wired.com/wired/archive/14.05/rfid_pr.html
- Verichip also failed to disclose to investors and the
SEC that patients' VeriChip implants might not be readable in ambulances.
VeriChip's chipping kit literature cautions that ambient radio waves, like
those in ambulances, can interfere with the equipment that reads the implanted
tags, but this important fact somehow didn't make its way into the SEC
- (Scanned images of VeriChip's chipping kit literature,
including the ambulance caution, are available here:
- Even with crucial information missing, investors may
still find themselves scratching their heads over poorly conceived aspects
of VeriChip's business model. "Anyone reading VeriChip's SEC filing
would have second thoughts about the stock," says Albrecht. "Who,
after all, would invest in a company that expects patients to document
their own medical history and blood type in a database? This could prove
risky for anyone, not to mention the elderly, Alzheimer's, and cognitively
impaired patients that VeriChip is targeting."
- She cites a passage from the registration statement that
reads, "we anticipate that individuals implanted with our microchip
will take responsibility for inputting all of their information into our
database, including personal health records."
- Other risks identified in the VeriChip filing could also
scare investors away. These include anticipation of ongoing multi-million
dollar loses, the "modest" number of people willing to get chipped,
public opposition, and the risk that the microchip may be found to damage
a person's health. The company also warns that it could be subject to lawsuits
and loss of confidence if its patient database is unavailable in an emergency.
The company admits that the database has been unavailable in the past.
- The market seemed to be catching on to some of these
problems as VeriChip began offering stock Friday in a bid to raise million
of dollars to fund its human chipping operations. Analysts noted a "lukewarm
reaction" to the stock and that it was trading on "the low end
of the expected range."
- To read the VeriChip Form S-1 Registration Statement
(Amendment No. 7) see: http://www.sec.gov/Archives/edgar/data/1347022/000119312507024937/ds1a.htm
- The VeriChip implant is a glass encapsulated RFID tag
that is injected into the flesh to uniquely number and identify individuals.
The tag can be read by radio waves from a few inches away. The highly controversial
device is being marketed as a way to access secure areas, link to medical
records, and serve as a payment instrument when associated with a credit
card or pre-paid account.
- ABOUT CASPIAN
- CASPIAN (Consumers Against Supermarket Privacy Invasion
and Numbering) is a grass-roots consumer group fighting retail surveillance
schemes since 1999 and irresponsible RFID use since 2002. With thousands
of members in all 50 U.S. states and over 30 countries worldwide, CASPIAN
seeks to educate consumers about marketing strategies that invade their
privacy and encourage privacy-conscious shopping habits across the retail
- ABOUT THE BOOK
- "Spychips" is the winner of the 2006 Lysander
Spooner Award for Advancing the Literature of Liberty and has received
wide critical acclaim. Authored by recent Harvard graduate Dr. Katherine
Albrecht and former bank examiner Liz McIntyre, the book is meticulously
researched. "Spychips" draws on patent documents, corporate source
materials, conference proceedings, and firsthand interviews to paint a
convincing -- and frightening -- picture of the threat posed by RFID.
- Despite its hundreds of footnotes and academic-level
accuracy, the book remains lively, readable, and hilarious, according to
critics, who have called it a "techno-thriller" and "a masterpiece
- "A chilling story about an emerging future in which
spychips run amok as Big Brother and Big Shopkeeper invade our privacy
in unprecedented ways."" - Chicago Tribune
- "Paints a 1984-ish picture of how corporations would
like to use RFID tags to keep tabs on you." - The Associated Press
- FOR MORE INFORMATION OR TO ARRANGE AN INTERVIEW, PLEASE
- Katherine Albrecht (kma[at]spychips.com) 877-287-5854
ext. 1 or Liz McIntyre (liz[at]spychips.com) 877-287-5854 ext. 2
- See http://www.spychips.com