The Office of the Data Protection Commissioner has said it investigating claims some credit unions may have hired private investigators to obtain confidential details on customers.
A report in today's Irish Independent said a number of credit unions have used private investigators to access information on people who owe them money.
The Data Protection Commissioner said it had been investigating for some time whether investigators are unlawfully accessing personal data from State bodies and passing it on to third parties.
It said the Department of Social Protection had been the target of "suspected unlawful activity" and that it had been cooperating with the investigation.
"It is a criminal offence under data protection legislation for a person to obtain access to personal data without the prior authority of the data controller by whom the data is kept and to disclose it to another person," it said.
"The Data Protection Commissioner has commenced prosecution proceedings in the District Court against some private investigators who are suspected of breaches of the Data Protection Acts."
A spokesperson for the Irish League of Credit Unions said it was not aware that "illegal means of data collection were being used".
They said: "If this was being done, it was without the credit unions' permission or knowledge.
"Credit unions would not knowingly employ any company who use illegal tactics and we certainly do not in any way condone the use of securing information by illicit means.
"We are aware that the Data Commissioner is not pursuing the credit unions in this matter but rather the private investigators directly."
The Department of Social Protection has said it treats the data of clients with "utmost seriousness".
It said: "The department has extremely rigorous data protection and information security policies, standards, procedures and guidelines in place, and every effort is made to ensure that personal customer data is used solely for business purposes and that it is not compromised in any way.
"The department ensures oversight in relation to data protection by keeping records of data accesses which are then subject to audit. All cases of suspected data breaches are investigated."