Momentum, the group set up by Labour leader Jeremy Corbyn's supporters in the wake of his electoral victory, could be investigated by the information commissioner.
The data protection regulator has said it has received a complaint about the group and was making enquiries into the matter.
Momentum, described as "militant" by former Labour cabinet minister Caroline Flint, has said it will co-operate with the Information Commissioner's Office.
"The allegation is completely unfounded. No evidence has been provided to support this allegation. Our understanding is the only enquiries the ICO have or will make at this time is to ask the complainant to provide evidence, which they have not done," Momentum said.
The regulator has not revealed the specifics of the complaint or who made it, but Momentum is known to have collected the data of tens of thousands of people.
The group gathered much of this data during the leadership campaign, which it says will help build a lasting network of support.
The announcement comes just two days after it was found that Momentum was trying to curb the influence of far-left groups by baring non-Labour party members from taking part in some of its meetings.
This followed a number of accusations levelled by Labour figures, including Flint, Labour MP Stephen Pound and voice of the moderates Labour First, of plotting to purge the party of moderates.
Critics say Momentum is forming a party within a party, attempting to vilify those critical of the current leadership and provide Corbyn with an alternative powerbase in order to "democratise" the party.
Even deputy leader Tom Watson has labelled Momentum as "a bit of a rabble", and former cabinet minister and backbench MP Alan Johnson has warned that Corbyn should stop supporting Momentum, as it is a group of people who have "detested the Labour party their whole life".