The State could be liable to pay compensation to the three million people who have the Public Services Card (PSC), according to a legal expert.
An Oireachtas Committee has heard the Government may be in breach of new EU data protection laws, if it continues to expand terms of the PSC.
Later this year, people will need a PSC to get a drivers licence or passport, as well as social welfare payments.
Solicitor Simon McGarr from Data Compliance Europe says the state could be liable for a big payout.
"If it is the case that the Public Services Card's database, the single customer view database, is not compliant - and I've set out why I think it's not compliant, it can't be compliant under the current system.
"We told that it's currently containing approximately three million individuals details: that would indicate that each one of those three million people have a claim on the State."
The Irish Council for Civil Liberties (ICCL) also addressed the Joint Oireachtas Committee on Employment Affairs and Social Protection.
It raised concerns over the collection of facial scans for the card and the "oppressive effect of the scheme on those most dependent on State services."
The delegation also highlighted what it says are significant human rights concerns associated with the roll-out of the card, a national biometric database, and the Single Customer View database.
ICCL director Liam Herrick said a similar system in India has led to real privacy issues.
“They rolled out a national identity card system quite similar to the one that we are now experiencing in Ireland and there were data breaches which led to personal data being sold on the open market to advertising agencies and private companies,” he said.
“These are the types of risks that occur.”
Last year, the Minister for Social Protection Regina Doherty said she cannot guarantee the protection of data from hackers – but insisted the Government was taking security “very, very seriously.”
The information stored on the card could eventually be supplied to up to 50 different state bodies.
Both the Taoiseach and the Minister for Finance have insisted the card is not a national ID card.
Minister Doherty has previously claimed the new card is not "compulsory" - but admitted it is "mandatory" if you want to access basic public services.
Mr Herrick said the rollout process has been “less than transparent” from the start adding that the entire scheme is “questionable in law and dangerous in relation to privacy.”
“Despite the extensive PR campaign which has been mounted by the Government on this issue over recent months, the main privacy questions remain unanswered,” he said.
Hr said there is a real risk that personal information could be stolen unless proper safeguards are put in place.
"We need to be convinced by the Government that it has the capacity to protect people's privacy," he said.
"There are real legitimate questions which we feel until recently the government has denied or really excluded.
"In the last couple of months we have seen an initiative from the Government to start providing answers about this scheme - which is very positive - but there are still unanswered questions."
He accused the Government of attempting to expand the card's uses without a proper public debate.
“As the scheme takes on more attributes of a mandatory and compulsory national card, the PSC disproportionately affects those who are most reliant on public services, such as people in unemployment, pensioners, and students who need state support in order to access third level education,” he said.
He said the mandatory nature of the card “fundamentally alters the nature of the scheme” and would appear to negate the legislative basis for its introduction.
Additional reporting: Sean Defoe and Jack Quann