Consumers need to know about the potential privacy issues if retailers want to use smart chips to crack down on shoplifting, according to civil rights group Liberty.

The organisation has started a campaign to raise awareness of the potential for the data storage and tracking abilities offered by Radio Frequency Identification Tags (RFIDs).

RFIDs can be used on removable tags, sewn into clothes or built into products. There have also been discussions about inserting the chips into Euro banknotes in an effort to stamp out money laundering.

According to Liberty, consumers should be aware of these experiments and what information the tags will make available to retailers and potentially unauthorised third parties.

"RFID tags are simply too powerful a technology to be left to the discretion of corporate executives as to how they use them," said a Liberty spokesman.

"The technology has the potential to track someone 24 hours a day, seven days a week."

Retailers want to cut down on shoplifting, but most agree that the system will let them build customer profiles and use the information to mount individually targeted marketing campaigns.

Another concern is that if the tags are not deactivated at the checkout, which is unlikely if they in clothes, money and products to monitor usage, its radio signal will continue to be emitted.

This means that unauthorised third parties, such as criminals who have managed to get hold of tag readers, could download information.

Liberty is setting up a unit to monitor RFID trials and has already started to generate feedback from retailers.

Marks & Spencer, which Liberty said is to start trials of an RFID tag that will activate in-store cameras when expensive items are taken off the shelves, has contacted the civil rights group for talks.

In addition, Liberty said that Asda has stated that it has no intention of using RFID tags in its UK stores.

But the organisation wants to open discussions between government, retailers and consumer groups on the privacy issues.

Liberty told vnunet.com: "Who is allowed to monitor who and what? What is going to happen to the data collected?

"All these issues need to be fully understood and the government needs to implement protective measures under a piracy law."