Red Caps are small, evil, goblin-like/dwarflike creatures which love bloodshed. Red Caps will attempt to beat to death Muggles lost in dungeons or on battlefields on dark nights. As Red Caps can be repelled easily by charms and hexes, Muggles, rather than adult wizarding folk, face the most danger from them (PA8, FB).
Red Caps are featured in various old Scottish folktales, and although their physical description varies, their personality and blood thirstiness never wavers.
The Red Cap is vicious, bloodthirsty, and cruel. Wonder why Voldemort didn't recruit an army of these for his war?
According to A Field Guide to the Little People (Nancy Arrowsmith with George Moorse, New York: Hill and Wang, 1977):
Some of the most bloodthirsty Scottish elves are the Lowland castle spirits. They are called Red Caps ... and by some accounts are said to live only in castles with a history of violence. Others say they live in all Lowland peel-towers [fortified houses or towers]. It may well be that both accounts are true ... The Red Caps' main occupation is colouring their red caps, which they dye with human blood. They throw boulders on to travellers from their towers, then catch the blood in their caps. As soon as the blood dries and the colour fades, the Red Caps look for new victims. They also foretell disasters by making a loud noise like the beating of flax. The only things that discourage them are crosses, cross-handled swords, and words from the Bible (p. 47).
These Red Caps are described as short, old elves with a sturdy build and long grey hair. They are about four feet tall and have red eyes.