Millions of Americans are having their movements tracked through automated scanning of their car license plates, with the records held often indefinitely in vast government and private databases.

A new report from the American Civil Liberties Union has found an alarming proliferation of databases across the US storing details of Americans' locations. The technology is not confined to government agencies – private companies are also getting in on the act, with one firm National Vehicle Location Service holding more than 800m records of scanned license plates.

"License plate readers are the most pervasive method of location tracking that nobody has heard of," said Catherine Crump, ACLU lawyer and lead author of the report. "They collect data on millions of Americans, the overwhelming number of whom are entirely innocent of any wrongdoing."

Crump said that the creeping growth of license plate scanners echoed the debate over the National Security Agency. "It raises the same question as the NSA controversy: do we want to live in a world where the government makes a record of everything we do – because that's what's being created by the growth of databases linked to license plate readers."

ACLU based their research on the results of freedom of information requests to 300 police departments and other agencies nationwide that generated 26,000 pages of documents. The mountain of training materials, internal memos and policy statements retrieved by the group has opened a door on a previously little understood world.

Crump said that it's impossible to put a figure on the scale of the license plate scanning phenomenon as information still remains patchy. But what is clear is that by using scanners mounted on police patrol cars, on road signs and bridges and outside public buildings such as libraries and schools, databases are now storing millions of data points.

Typically, the systems collect photographs, license plate numbers, as well as the date, time and location where the vehicle was seen. What is of concern to ACLU is the fact that the information gathering is indiscriminate – it sucks in the details of all passing cars – and that the data is stored with minimal safeguards and often for long periods or even forever.

"Even if license plate reader data is not being misused already, we should all be concerned about it lingering in government databases for years as we never know how it will be used in future," Crump said.

The purpose of vehicle scanning is to provide law enforcers with an extra tool in their search for criminals or stolen cars. Scanned data is checked against "hot lists" of stolen vehicles, felony warrants, offenders on probation and sex offenders, and when matches are achieved the authorities are alerted to the "hits".

But ACLU's analysis of the information it gathered on the scanning systems found that only a minuscule proportion of recorded license plates were related to any criminal or other law enforcement issue. In Maryland, some 29m license plates were recorded in 2012, but of those only 0.2% were "hits" associated with crimes or other wrongdoings; and of that 0.2%, about 97% were for a traffic misdemeanour or a violation of the state's vehicle emissions rules. To express that another way, out of every 1m license plates read in Maryland, only 47 were linked to more serious crime such as a wanted suspect or terrorist organisation.

That would not matter so much were there proper controls in place for how to store the data and for how long. But ACLU found that only five states have introduced laws to govern these scanning devices, while at a local level standards vary enormously across the country.

Some authorities such as Minnesota State Patrol delete all their scanned records after 48 hours. Others are much looser in their regulations, such as the town of Milpitas in California, population 67,000, which stores almost 5m plate reads with no time limits at all.

Many police authorities have few or no regulations over use of the scanners other than that they should not be deployed to track people of personal interest such as spouses or friends. Pittsburg police department in California stated on the documents submitted to ACLU that the scanners can be used for "any routine patrol operation or criminal investigation – reasonable suspicion or probably cause is not required". The police department in Scarsdale New York was glowing about the potential of the technology, saying the scanners had potential that "is only limited by the officer's imagination".

In New York city, the NYPD used license plate readers as part of their controversial monitoring of mosques in the wake of 9/11, according to an investigation by Associated Press.

Mike Katz-Lacabe from San Leandro, California, became curious about the use of license plate scanners after he heard that his town's police department was investing in a system. In 2010 he submitted requests for information on the data stored on him and was astonished that over a two-year period some 112 images had been gathered and held on him, including pictures of his two cars in front of his house, friends' houses, the local library and so on.

One captured image showed Katz-Lacabe and his daughters getting out of the car. "I was amazed by how much information they had gathered on me over a short period of time."

The police force has recently introduce a one-year limit on storing the data, but he thinks that's still too long. "People should be concerned about this for so many reasons: maybe they visit an abortion clinic, or have sensitive medical treatment, or attend a political demonstration – all those movements can be gleaned from this kind of data," he said.