Researchers in Amsterdam say they have completed a device that prevents radio frequency identification tags from being read. The university professor overseeing the project says the goal is to protect people from a technology that is gaining wide acceptance but has the potential to compromise consumer privacy.

RFID chips, as small as a gain of sand, are being embedded in people, money, passports, and clothing from T-shirts to shoes. They're being used to monitor vehicle traffic, track inventory and livestock, identify missing pets, and help pharmaceutical companies fight counterfeit drugs.

Vrije Universiteit Professor Andrew Tanenbaum said this week that the PDA-size handheld device " dubbed RFID Guardian -- beeps, warning a person when a RFID scanner is near and trying to read a chip embedded in a piece of clothing the person might be wearing, for example.

"Industry thinks nothing about invading your privacy," Tanenbaum said. "European banks plan to put RFID in money, larger bills. That means a robber can walk down the street with a scanner to find out how much money you have in your pocket and determine who will make the best target."

The RFID Guardian runs on a 550-Mhz XScale 32-bit processor with 64 MB of Ram that functions as the central nervous systems. XScales are often found in PDA and cellular phones, said Tanenbaum. The protocol stack was written in C to run on top of eCos, an open-source operating system.

Tanenbaum and a team of students are working on further developing the software, looking into building multiple protocol stacks that can run on the device. Plans also include fully debugging the device and securing the communication channel between the device and readers. Tanenbaum envisions spending the next few months debugging and preparing the device for commercial use.

Forrester Research Inc. principal analyst Christine Overby, who follows RFID in the retail industry, said these types of devices points to a need for consumer privacy, but "I don't think you'll see any mainstream adoption."

Some consumers view RFID technologies as a threat to civil liberties, said Liz McIntyre, co-author of "Spychips," a book on RFID and privacy. The technology industry would "love to shift the burden of protection onto consumers, who should not have to worry about whether the things they wear and carry contain tracking devices," she added.

Other companies are also developing products designed to protect consumers from RFID. Gartner Inc. research vice president Jeff Woods said RSA Security Inc., a company that protects online identities and digital assets, created the RFID blocker that works similar to the RFID Guardian Project. "The RSA blocker is a system that 'confuses' an RFID reader and prevents it from reading personal or private tags," he said. "The challenge for RSA was to define which tags were private and who had access to them."