FTC bans Rite Aid from using facial recognition surveillance for five years

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Pharmacy chain Rite Aid is getting a timeout from AI facial recognition surveillance tech thanks to federal regulators. The U.S. Federal Trade Commission (FTC) today announced a settlement with Rite Aid stating the chain recklessly deployed AI biometric surveillance on customers without safeguards — and slapped a 5-year ban on the controversial practice as a result.

The FTC alleges that from 2012 until 2020, Rite Aid scanned the faces of shoppers across hundreds of locations in an attempt to suspected thieves and individuals suspected of other unlawful activity. However, the agency says the technology was rolled out without properly testing it for accuracy or preventing potential privacy harms. 

This purportedly caused innocent patrons to be falsely accused and harassed by employees acting on incorrect facial matches, and disproportionately targeted women and people of color (POC).

“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,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “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.”

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Facial recognition technology has advanced rapidly in recent years, enabling a range of commercial and law enforcement applications but also raising significant privacy concerns. Researchers have documented the technology’s potential for biases that could unfairly impact marginalized groups. 

Retailers have looked to implementations like Rite Aid’s to help curb theft, but critics argue such uses often proceed without sufficient consent, transparency or accuracy testing. The FTC has increasingly scrutinized the biometrics sector, particularly as retailers and others deploy tools to identify individuals in public spaces without clarifying what data may be collected or how it could be used and shared. 

This marks one of the strongest actions to date against a company’s biometric practices, reflecting growing recognition that emerging surveillance capabilities demand careful oversight.

Multiple implementation failures lead to ban

According to the agency, Rite Aid contracted with vendors to build a database containing photos and personal information of individuals suspected of past criminal activity at stores. 

While disputing specific allegations, Rite Aid acknowledged in a statement working “to resolve this matter” with regulators and enhancing practices to satisfy the agreement. 

““We are pleased to reach an agreement with the FTC and put this matter behind us. We respect the FTC’s inquiry and are aligned with the agency’s mission to protect consumer privacy. However, we fundamentally disagree with the facial recognition allegations in the agency’s complaint,” said the Pennsylvania based pharmacy chain in its statement. 

“The allegations relate to a facial recognition technology pilot program the Company deployed in a limited number of stores. Rite Aid stopped using the technology in this small group of stores more than three years ago, before the FTC’s investigation regarding the Company’s use of the technology began.”

However, the FTC says tens of thousands of low quality images, obtained from sources like security footage and social media, were incorporated into the system. This high number of poor-quality images, the complaint states, increased the likelihood of inaccurate matches.

The technology produced thousands of false positives, sometimes identifying customers as suspects from thousands of miles away or flagging the same person at multiple locations. The complaint says Rite Aid did not consistently ensure staff followed a policy allowing them to flag problematic identification results. 

In addition, the FTC states Rite Aid failed to properly test the technology for accuracy before rolling it out or establish procedures to assess match error rates over time. Employees guiding the program in stores also did not receive sufficient training on the technology’s limitations.

According to the complaint, racialized people faced disproportionate rates of mistaken identification by Rite Aid’s systems in some minority-majority communities. The AI system wrongly flagged customers who were then publicly confronted, searched, removed from stores or even faced down by police — sometimes in front of family and friends. 

With no warnings that biometric profiling was taking place, shoppers had little chance to avoid unfair surveillance or recourse against false allegations.

In addition to halting any biometric monitoring for half a decade across physical and online Rite Aid outlets, the proposed settlement demands new oversight if such capabilities are reconsidered down the line. 

This includes rigorous upfront accuracy screening as well as ongoing audits to catch problematic deployments before privacy and discrimination issues arise. Consumers must also be notified of any data enrollments or actions resulting from a system’s outputs.

The settlement isn’t limited to just biometrics, however. 

The FTC further contends Rite Aid flouted a 2010 mandate by failing to ensure vendors entrusted with customer information employed adequate security best practices. As part of remediating past compliance failures, new stipulations institute mandatory security precautions like multi-layered authentication, continuous employee training and provide the FTC with annual certification of adherence to the order. 

Rite Aid insists safety remains top priority while navigating ongoing bankruptcy proceedings triggered by Wall Street’s squeeze on the ailing chain amid industry turmoil.

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