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by
Katherine Albrecht
2-12-7
from
Rense Website
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).
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 filing.
(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
HERE.
The VeriChip implant is a glass encapsulated RFID (Radio
Frequency Identification) 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 spectrum.
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 (Radio
Frequency Identification).
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 of
technocriticism."
"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
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