Greed Meets Terror
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Can biometric systems foil terrorists? Probably not--but try telling that to Wall Street.
After 22 years working in casino security, Charlie Guenther can eagle-eye a card cheat from across the room. Four years ago he met his match. The Trump Marina casino in Atlantic City linked its already extensive network of surveillance cameras to a mug shot database of some 9,200 criminals and a biometric face-recognition system designed by Viisage Technologies of Littleton, Mass. The system, which works by continually scanning every face in the casino, trolls the picture database of miscreants for matches. Within days of its installation, the cameras identified a group of six baccarat cheaters who'd previously been arrested in California. Guenther called the local police. "We sat there and just waited for them to do their cheating move--distracting the dealer and switching cards," says Guenther. "The cops swooped in and arrested them on the spot. The face-recognition system kicked butt." Since then, the Trump Marina casino has identified hundreds of ne'er-do-wells and either has ejected them or had them arrested.
Once the preserve of James Bond movies, biometrics are now being used to combat everything from credit card fraud to illegal immigration. Less complicated than they seem, systems like the one developed by Viisage use physiological or behavioral characteristics--fingerprints, iris and retina configurations, voice patterns, facial structure, or hand geometry--to verify identity. The Viisage setup works by taking 128 measurements of each face, such as the distance between the eyes, and converts those dimensions into a unique binary code, which is then compared with a photo database. "We've had a case where a person aged ten years, gained 30 pounds, and grew a beard, and we were still able to identify him," says CEO Tom Colatosti, who claims his software is 99.7% accurate.
Some biometrics developers even assert that an airport system similar to the one at the Trump Marina might have prevented the Sept. 11 terrorist airline hijackings. That's a real stretch. The systems don't detect weapons, for instance; they merely enable authorities to verify that people are who they claim to be. Besides, a person's picture has to be part of the database in order for him or her to be identified. Only two of the 19 terrorists were on CIA or FBI watch lists.
Even so, investors seem to think they've identified a winner. On Sept. 17, the day Wall Street resumed trading after the attacks, the three largest publicly held biometrics security firms became market darlings. Indentix, a Los Gatos, Calif., maker of biometric fingerprint hardware and software, saw its shares rise 71%, to $7.20; Visionics Corp., a Jersey City, N.J., company that develops face-recognition technology for authentication and criminal identification, posted a 93% rise in its stock price, going from $4.27 to $8.25 per share; and Viisage more than doubled its share price, from $1.94 to $4.70. Of the three companies, two--Viisage and Visionics--were barely profitable last year, while Identix lost money. Investors were probably emboldened by a pre-attack projection that revenues in the biometrics industry will grow from roughly $400 million in 2000 to $1.9 billion by 2005.
The run-up of biometrics stocks has an eerily familiar ring to it: frenzied investors rewarding new, barely profitable tech companies in an industry whose growth is predicated on the promise that its devices will someday be ubiquitous. In fact, biometric security systems aren't going to make the world safe from terrorism on their own. The types of large, scalable networks needed for the nation's airports haven't been battle-tested. Indeed, Wall Street may have created its first post-dot-com bubble.
It's true that biometric systems were making inroads in unexpected places well before Sept. 11--and not just at casinos. The Mexican government, for example, employed face-recognition software during the country's 2000 presidential election to ensure that registered voters voted only once. And since 1998 the New York State welfare system has used fingerprinting technology to make certain recipients get one--and only one--set of benefits, saving the state millions in potential fraud.
With concerns about security now looming large in nearly everyone's mind, biometrics companies have been inundated with customer queries. "I've been getting about 150 calls a day--personally--up from about 15," says Viisage's Colatosti. "But interest is always easier to generate than sales." Colatosti admits that only one request has materialized into an actual contract--for an airport. Still, he believes that very soon his customer base of mostly casinos is due to shift. "Originally we were focusing on selling to border crossings and airports, but that business never took off," he says. "Now that's all different."
Joseph Atick, CEO of Visionics, spent the final days of September completing a deal with Raytheon. The two companies will team up to offer Visionics' flagship FaceIt facial-recognition surveillance applications to airports, airlines, and government facilities. Atick claims that the alliance has already lured at least one new customer--a major airport that will this month install about 35 cameras, a handful of computer servers, and a half-dozen terminals at a cost of roughly $500,000. (For national-security reasons, both Atick and Colatosti are forbidden from disclosing which airports they're wiring.)
But biometric security systems are far from perfect. For starters, most face-recognition systems can be thrown off if the camera's view of a face is more than 15% off center. In addition, as Bruce Schneier, a computer-security expert and chief technology officer of Counterpane Internet Security in Cupertino, Calif., points out, "In a situation where the thing you're looking for--a terrorist--is rare, false positives will easily overwhelm the system." If the system is looking for someone who is one in ten million and the technology makes one error in every 10,000 scans, it's going to generate 1,000 false positives for every terrorist it spots, he explains. "That makes the system useless," says Schneier. "It's crying wolf all the time."
Then there are privacy concerns. In wartime Americans may seem willing to abide privacy intrusions in the name of security. But wars eventually end. "I'm all in favor of stronger airport security," says Phil Agre, professor of information studies at UCLA. "But we're just going to make things worse with more gadgets. Every war leaves behind new institutions that don't go away. If we're not careful, this one could leave behind an institution of surveillance-driven warfare in the fabric of our daily life." And if recent history is any guide, there may be one other thing left behind from the current biometrics boom--burned investors.
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