Like many technologies, low-cost Radio Frequency Identification (RFID) systems will become pervasive in our daily lives when affixed to everyday consumer items as ”smart labels”. While yielding great productivity gains, RFID systems may create new threats to the security and privacy of individuals or organizations. This paper presents a brief description of RFID systems and their operation. We describe privacy and security risks and how they apply to the unique setting of low-cost RFID devices. We propose several security mechanisms and suggest areas for future research.