Rite Aid banned from use of facial recognition tech for 5 years

Dive Brief:

Rite Aid has been banned from using facial recognition technology for surveillance for five years. The terms are part of a court case settlement announced Tuesday by the company and the Federal Trade Commission.
The FTC says the AI-based technology, which the company deployed to identify and track potential shoplifters “or other troublemakers,” collected and stored images of people without their knowledge and generated thousands of false positives. As a result, many people were mistakenly accused of wrongdoing, “particularly women and people of color,” according to the FTC.
In a statement, Rite Aid disagreed with some of the FTC’s allegations. The company stated that the facial recognition technology pilot program was deployed to a limited number of stores and they stopped using it three years ago, before the agency’s investigation began. But the company said that it respects the inquiry and is “aligned with the agency’s mission to protect consumer privacy,” and is pleased to have an agreement with regulators that will “put this matter behind us.”

Dive Insight:

According to the FTC, Rite Aid used third-party facial recognition technology powered by artificial intelligence from 2012 to 2020 to identify potential shoplifters or other individuals engaged in problematic behavior.

However, the retailer failed to take reasonable measures to prevent harm to consumers, according to the complaint. Those measures should have included informing customers that the technology was in use in Rite Aid stores.

As a result of Rite Aid’s failure to take those steps, the FTC said, “employees, acting on false positive alerts, followed consumers around its stores, searched them, ordered them to leave, called the police to confront or remove consumers, and publicly accused them, sometimes in front of friends or family, of shoplifting or other wrongdoing.”

The company also failed to assess the accuracy of the facial recognition tech before deploying it, according to the complaint. Rite Aid further failed to adequately train employees in charge of the facial recognition system and database by informing them of the possibility of false positives. Those false positives wrongly flagged people of color more often, the FTC said.

“Rite Aid’s reckless use of facial surveillance systems left its customers facing humiliation and other harms, and its order violations put consumers’ sensitive information at risk," Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Today’s groundbreaking order makes clear that the commission will be vigilant in protecting the public from unfair biometric surveillance and unfair data security practices.”

Beyond the five-year ban, the settlement requires Rite Aid and its third-party tech providers to delete any images collected by the facial recognition system; notify consumers about the in-store use of biometric surveillance; and investigate and respond in writing to consumer complaints about actions taken based on AI-based surveillance.

Rite Aid’s settlement with the FTC does not include any financial penalties or fines. In an email, an FTC spokesperson said a 2021 U.S. Supreme Court decision “eliminated one of the commission’s best tools for obtaining monetary relief. Nevertheless, the settlement in this case contains very strong injunctive relief that will protect consumers if Rite Aid uses automated biometric technologies for security in the future and will ban Rite Aid from using facial recognition or analysis technology for five years.”

Rite Aid is also accused of violating a 2010 FTC order by failing to adequately oversee its service providers. As a result of violating that order, Rite Aid must also implement an information security program and the company’s top executives are required to oversee it. Reuters in a 2020 investigation identified the facial recognition service providers as DeepCam and FaceFirst.

Rite Aid filed for Chapter 11 bankruptcy in October. The FTC’s order regarding the facial recognition settlement requires approval from the bankruptcy court. “Looking ahead, we are focused on the important actions underway to strengthen our financial position as we continue providing leading healthcare products and services to the nearly one million customers that we serve daily,” Rite Aid said.