(FORTUNE Magazine) – 6

We all know that the world can be a dangerous place, and we're learning that the online realm can be dangerous too. An increasingly popular strategy for warding off threats ranging from terrorism to identity theft is to gather information on and verify the identity of everyone, looking for signs that indicate a potential troublemaker. The conundrum is that to gain a little more security, citizens are being asked--or told--to give up a lot more privacy. Often people part with their personal information willingly, but in a growing number of cases technology is being used to gather information surreptitiously.

Surveillance devices aimed at humans are proliferating at an unprecedented rate, from lasers that can monitor members of a crowd for abnormal vital signs, to biometric scanners that pick out individual travelers at a distance and link them to vast commercial and government databases containing their detailed personal information. Although the exact figures are unknown because some surveillance spending is hidden inside "black budget" military or spy agency programs, the federal budget for 2005 shows double-digit spending increases for research into systems designed to gather information on, well, you.

Kush Wadhwa, a director of research at the consulting company Biometric Group, expects worldwide sales and licensing of fingerprinting, facial recognition, and other biometric devices to jump to more than $1.8 billion in 2005, from $719 million in 2003. By 2008, he says, global biometric revenue will be $4.8 billion just for the gear, not counting billions of dollars more in services.

Biometric scanners are just one facet of the people-surveillance industry. The Central Intelligence Agency has been funding ways to spy on Internet chat rooms. Black-box computers in rental cars use global-positioning satellite technology to track and map a vehicle's travels, alerting the rental company if, for example, the driver speeds or crosses into Mexico in violation of the contract. Republican leaders in Congress say a top priority this year will be to set nationwide standards for driver's licenses, which critics fear could lead to a de facto national ID card.

Indeed, surveillance technologies appear to be developing faster than legal safeguards to protect the privacy of citizens. Decrying what they call the government's "significant redirection in science funding toward the development of systems of mass surveillance," a group of prominent computer scientists and privacy advocates issued a statement last fall warning of "a fundamental risk to political freedom, privacy, and Constitutional liberty." Meanwhile, through such laws as the U.S.A. Patriot Act, passed in the weeks after 9/11, judicial oversight of intelligence gathering has been curtailed.

In a report prepared last year for Secretary of Defense Donald Rumsfeld evaluating the privacy implications of a proposed universal database holding billions of pieces of information about ordinary citizens, a panel of independent experts concluded that today's privacy laws are often inadequate to keep up with new technologies for snooping. "That inadequacy," the report continued, "will only become more acute as the store of digital data and the ability to search it continue to expand dramatically in the future." -- Peter H. Lewis