The economy is so bad in Argentina that the government recently said it would start taxing overseas credit card purchases. It also demanded that banks report all credit card transactions -- foreign or domestic -- saying the data would be used to find tax cheats.

Even George Orwell couldn't have imagined this meeting of Big Brother and Big Data: a handy database of every single purchase made by citizens, ready to be categorized and analyzed by the government.  Let your mind wander for a moment and you can imagine the disturbing possibilities of a government so invasive that it knows when and where you buy milk and bread. 

The obvious question: Could it happen here?  There are grand cultural and economic differences between Argentina and the United States, but if the history of privacy tells us anything, it is this: Governments and corporations can rarely resist the temptation of using technology to gain the upper hand.

"This gives me chills," said Gartner banking consultant Avivah Litan, who was in Argentina recently consulting with that nation's government banking officials. "I think it is a reminder that our data can be looked at by anyone and probably is being looked at."

Argentina is not the first government to examine credit card receipts. In 2011, Brazil began taxing overseas credit card transactions. And Spain recently outlawed cash transactions over $2,500, a tactic that forces consumers to use traceable, electronic purchasing tools for big-ticket items. 

Big Brother is not behind these drastic measures. In Argentina, where only about 50 percent of the population buys with plastic, a currency crisis and high inflation have led to a dramatic rise in overseas purchasing. Taxing foreign purchases is an attempt to stem this tide, and encourage domestic spending. Brazil's motivation is similar. 

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But once the pipeline for data is established and the database is built, what's to stop mission creep? Argentina has said it will examine domestic transactions for evidence of undeclared purchases or other signs of tax evasion. What else could a government find in a database of transactions?

"When I first saw the story it kind of took my breath away," said Bill Hardekopf, who operates the credit card information website LowCards.com "I thought, 'Oh my, a government can track the purchases of every one of their citizens?' " 

There is a way to avoid becoming a line item in a government credit card transaction spreadsheet: pay with cash, something one in two Argentinians still does. But in the U.S., cash has become passé. Last year, only 27 percent of point-of-sale purchases were made with cash, compared to 66 percent for credit and debit cards, according to Javelin Strategy and Research, which expects that number to dip to 23 percent by 2017.  

Meanwhile, a host of new payment tools -- still rough around the edges -- are about to find their way into consumers' pockets and purses. Mobile cellphone payments are coming of age, with a quarter-trillion in annual transactions expected by 2016, according to IE Market Research.  And even the simplest of cash transactions -- "Buddy, can I borrow $5?” -- might not be long for this world.  Starbucks recently partnered with Square, a simple tool that allows cellphone users to accept casual payments from friends or small business clients. The convenience of such tools is undeniable; so is their traceability.  

"As we become more and more of a cashless society, the likelihood of purchases being tracked increases. Whether that is used for negative purposes, or will cause personal privacy issues, I don't know, but I can see the possibilities," Hardekopf said. 

But could it happen in the U.S.? Hardekopf said he had trouble imagining Washington could get away with the Argentinian tactic. He believes privacy interest groups would scream, other safeguards would kick in and the U.S. population just wouldn't swallow it.

But there are no laws preventing this kind of information sharing between banks and government agencies, Litan points out. Law enforcement officials routinely obtain personal information, such as cellphone locations and credit card receipts, during the course of criminal investigations.

"The (U.S.) government does have access to this information now because it regulates the banks," she said. "There's no secrecy laws like there are in Switzerland. There's no privacy laws that would prevent this."

Dan Mitchell, an economist at the libertarian Cato Institute, said there have already been attempts by both state and local governments to more broadly obtain detailed consumer financial data. The health care reform bill included a provision that required merchants to report credit card processing volume data to the IRS, for example.  And recent efforts by states to enforce sales tax on online purchases will necessitate detailed reporting on credit card transactions by merchants, he warned.

“So it's just a question of expanding the existing set of Orwellian laws,” Mitchell said.

Probably the strongest firewall against such an intrusion would be banks themselves, which would no doubt fight massive data requests.  But transaction data sharing from banks to government officials has risen sharply since the Sept. 11, 2001, terrorist attacks. The number of Suspicious Activity Reports filed by banks with their federal regulators has soared from 281,000 in 2002 to 1.5 million in 2011 (.pdf), according to the Financial Crimes Enforcement Network. Much of that increase can be attributed to a rise in mortgage fraud, but it demonstrates a dramatic increase in cooperation between banks and government officials. There also is a long history of federal authorities buying access to large troves of consumer data – such as the one once operated by commercial data broker ChoicePoint, now owned by the same firm which operates Lexis-Nexis.

That's why privacy expert Rob Douglas says that Argentina's data sharing is not an isolated incident.

"Given the explosion in the collection and retention of personal data by governments around the world under the guise of national and economic security, I fear the Argentine model is where all countries - including the U.S. - will end up under one scenario or another," he said. "After all, government by its very nature constantly seeks to know more about the governed. With the ever-expanding ability to store and sift vast amounts of personal data, it's inevitable that governments will do so unless reined in by the governed."

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Cellbrite.com

The "UFED Physical Pro" helps law enforcement suck all data out of a cell phone in moments.

The "Universal Forensic Extraction Device" sounds like the perfect cell phone snooping gadget.

Its maker, Israel-based Cellbrite, says it can copy all the content in a cell phone --  including contacts, text messages, call history, and pictures --  within a few minutes.  Even deleted texts and other data can be restored by UFED 2.0, the latest version of the product, it says.

And it really is a universal tool. The firm says UFED works with 3,000 cell phone models, representing 95 percent of the handset market.  Coming soon, the firm says on its website: "Additional major breakthroughs, including comprehensive iPhone physical solution; Android physical support – allowing bypassing of user lock code, (Windows Phone) support, and much more."  For good measure, UFEC can extract information from GPS units in most cars.

The gadget isn't a stalker's dream; it's an evidence-gathering tool for law enforcement. Cellbrite claims it’s already in use in 60 countries.

That apparently includes the U.S. The American Civil Liberties Union in Michigan says it has learned that state police there have purchased some of the gadgets.  What is it doing with them? So far, Michigan authorities aren't telling. A public records request for information by the ACLU was met with a prohibitive $500,000 bill to cover the supposed cost of making the documents available.

"They did produce documents which confirmed that they have them," said Mark Fancher, a staff attorney at the ACLU office. "We have no idea what they are doing with them."

 Technology and the Fourth Amendment have had a rocky relationship. When The Founding Fathers created protections against unlimited search and seizure, they never imagined the kind of tools that would be available to 21st century police officers.

Cell phone data is an indispensible tool in both investigations and prosecutions. A drug dealer's contact list is an obvious treasure trove. Location information stored in the phone can prove (or disprove) an alibi.  Texts are at least as valuable as emails. Increasingly, smartphone s are used as mini-laptops, placing even more ready-made evidence in one small package -- as long as law enforcement can get to it before it's destroyed. 

Because handsets are nearly always with suspects, it's easy for a would-be criminal to delete information during a traffic stop.  Remote wiping programs exist that mean critical evidence could be destroyed even after a police officer takes possession of a suspect's phone. That means law enforcement official s have great interest in slurping up all the secrets that a handset might contain as quickly as possible.  Enter Cellbrite.

But how fast is too fast?  Fancher and the ACLU argue that most cell phone searches  are an invasion of privacy that requires law enforcement officials to get a court order before rummaging through a suspect's handset data.  While UFED could be used after an order is obtained, its obvious focus is on time-critical searches -- those that would occur, for example, right after a "routine traffic stop."

"The Fourth Amendment protects citizens and allows them to have some confidence that law enforcement can't go in on a whim and take a look at most private details of our lives," said Fancher.  "Our concern is that the device can empty a cell phone within 90 seconds, offering law enforcement a powerful ability to intrude on and infringe on people’s rights."

Do cops need a court order to search the contents of a cell phone?  The law is still evolving, but at least one recent major decision chose police over privacy. The California Supreme Court recently issued a ruling that allowed police to use text message evidence they'd obtained without a court order. The ruling seemed to open the door to widespread use of warrantless cell phone searches in California.

But Fancher cautioned against generalizing too much from a single search-and-seizure case.

"They often involve a lot of nuance," he said.  "You really have to go case-by-case when searches are involved."

There are clear-cut cases where court orders wouldn't be required to search cell phones -- if police are in hot pursuit of a crime or have probable cause to believe that evidence is in immediate danger of being destroyed.  Such situations are exceptions, however, Fancher said. He's concerned that the easy-to-use gadgets in the hands of field officers would make cell phone searches the rule, rather the exception.

Cellbrite didn't immediately respond to a request for comment. On its website, the firm says it was founded in 1999 and was purchased by a Japanese company in 2007. Its data-slurping technology grew out of products it sells that are used to transfer contact information from old phones to a new phones at cell phone retailers.

The Michigan State Police did not respond to a request for comment.

Technology continues to throw major legal headaches at law enforcement officials and Fourth Amendment rights advocates. 

The U.S. Supreme Court is currently mulling a related issue involving the use of persistent GPS monitoring of suspects without a warrant.  In that case, the FBI placed a GPS monitoring device on a suspect's car without a warrant and then tracked his driving for driving weeks. The Department of Justice says the technique is akin to surveillance on public roads, but a federal appeals court ruled that such aggregation of movements over time constituted a Fourth Amendment violation. Because the ruling conflicts with other appeals court rulings in similar cases, the Department of Justice recently asked the Supreme Court to take the case and settle the matter.

Fancher said his quest for information about the cell phone data copying device from the Michigan State Police began in 2008. After receiving a $500,000 bill for records requests, along with a demand for a $250,000 down payment, the ACLU tried to narrow its requests to reach a more reasonable cost. It filed 70 FOIA requests last November, for example. But the method also proved fruitless.

"We have tried everything we know of to work with FOIA personnel to get the documents we seek and had no success, so we've taken the opportunity to go to the top and try to shake things loose," Fancher said.  On April 13, the ACLU sent a letter to State Police Director Kriste Etue, and made that letter public to the media.

"The ACLU should not have to go on a fishing expedition in order to discover whether the state police are violating the privacy of individuals through the use of new, sophisticated technology," the letter read.

The ACLUs real concern with the gadgets is that they will prove too tempting for state troopers, and abuses will occur.

"We're not accusing the state police of using them improperly.  It's not illegal or improper for them to have them," he said. "Our concern is, what are they doing to insure they are complying with constitutional requirements? ... We'd be interested, for example, in what kinds of supervision there is over their use."

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