Data protection and privacy concerns are forcing retailers to rethink plans for the use of controversial product tracking tags.

Radio Frequency Identification (RFID) tags have been seen by many retailers as an ideal way of stepping up in-store security and preventing shoplifting.The tags, which emit radio frequencies capable of being picked up 90 feet away, are currently being trialled by supermarket Tesco.

One Cambridge store has been using the tags to photograph shoppers when they remove packets of Gillette razor blades from the shelf.

But now Gillette, an early user of RFID technology, has backtracked from using the tags on its commercial products. Instead it now plans to use the tags only on palettes, enabling it to track products through its supply chain.

Gillette's trial, which started in January, was due to continue throughout 2004. It wanted to evaluate RFID technology for monitoring products from manufacturer to retailer. Many of its products disappear before ever being stacked on shop shelves.

Gillette, which was unable to comment at the time of going to press, has not given a reason for its unexpected decision. But privacy experts have warned that the use of tags for both supply chain and security tracking raises data protection issues.

While RFID tags can be used for security purposes, data protection laws prevent the information collated from being used by other systems, such as loyalty cards, warned Simon Stokes, head of e-commerce at law firm Tarlo Lyons.

"Using the information for purposes other than that it was collected for opens up a real minefield," he said.

Other retailers such as Benetton in the UK, Woolworths, Marks & Spencer and Asda are all currently looking at RFID technology. Marks & Spencer plans to include smart tags in clothes from this autumn.