A number of Melbourne clubs and bars, including Chasers and Crown Casino, use machines to scan patrons upon entry to help detect fake IDs, retain a record of banned patrons and for market research.
Commissioner Timothy Pilgrim said his office had received an increasing number of complaints from people uncomfortable with handing over their personal information to get into a venue on a night out.
''This increases the potential for it to be used or disclosed for purposes that the person may not have expected or wanted. It may also open up the person to an increased risk of identity theft or fraud.''
Mr Pilgrim said he had investigated ''some clubs'' using the technology to make sure they were handling personal information responsibly according to their obligations under the Privacy Act.
''If they do need to collect people's personal information, including biometric information, they must tell people why they are doing this and which organisations the information may be disclosed to, and give people access to see the information the pub or club holds about them on request. This information should be prominently displayed at point of entry to the venue.''
''Pubs and clubs must carefully consider whether collecting identity information is necessary for their functions or activities. I am asking venues to consider whether they need to collect this personal information and secondly, how long this information is kept for.''
However, Victoria's acting privacy commissioner, Dr Anthony Bendall, estimated more than 90 per cent of Australian businesses were not covered by the regulations in the Privacy Act because they had an annual turnover of less than $3 million.
Privacy principles were unclear on businesses' obligations if the information is compromised, he said.
''If you do hold personal information and [it is] breached in some way you're not required to notify people that's happened, and if it's something like your licence there's a good reason you should be telling them and to be taking steps to helping patrons protect themselves,'' he said.
Sharmaine Nadesapillai, an IT worker, scanned her licence at Chasers nightclub in Chapel Street two months ago. But she is now unsure whether her personal information is secure.
''As someone who works to secure data … I can't see the purpose of a nightclub using my information, which includes my date of birth, where I live and all my personal details,'' she said. ''I don't know what security they've got on their back end. I would be worried someone could get into that information.''
Ms Nadesapillai said it was unclear why nightclubs needed copies of drivers' licences when they were only legally required to check proof of age for entry.
The Victorian warning comes almost two weeks after NSW Premier Barry O'Farrell proposed introducing ID scanners that stored patrons' details and shared them with other clubs and pubs to combat drunken violence in Sydney's Kings Cross.
ID scanner company Scannet gives venues the rights to their own databases, and allows them to share the photos - but not the licence details - of banned patrons with other venues. Scannet director Joel Sheehan said it had 45 systems operating in Australia since it began selling them last year.
Mr Sheehan said machines were password protected, with patrons generally more willing to scan their licences at clubs and pubs now.
''Now people that aren't troublemakers that want to go out and enjoy themselves are all for it,'' he said. ''At the end of the day the system's voluntary, they don't have to have their ID scanned as a condition of entry but at the same time if somebody's not going out to cause trouble they shouldn't have any problems having their ID scanned.''
He said ID scanners had had a deterrent effect in clubs and pubs, as venue owners could pass on records to police of violent customers. He credited the machines with improving the safety of nightlife in Newcastle, where the company launched.
''I see how it changes a lot of venues, I see the crowd changes, the attitude of people changes, people become aware that they're accountable for their actions. Venues with no ID scanners, they might have [CCTV] cameras but they're useless in the dark.''
While the Scannet website says the machines can help venues ''forecasting future business'', Mr Sheehan said that it was up to venues to comply with the Privacy Act and avoid abusing customers' details.
Australian Privacy Foundation board member Dr Katina Michael, said ID scanners were not effective in detecting fake IDs or deterring violent behaviour but put the majority of people at risk of identity fraud.
''When you're talking about private entry to pubs and clubs … they may turn personal information into ones and zeroes at the back end and these stored identities in the future can be stolen … How do you reclaim your identity?''
Gaming minister Michael O'Brien would not be drawn on whether the Baillieu government was considering implementing NSW-style proposals in Victoria. But he said police pubs and local councils could introduce ''additional security measures'' in liquor accords.
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