Rite Aid settles FTC complaint on use of AI recognition technology 

Rite Aid Corporation has reached a settlement with the Federal Trade Commission regarding the company’s use of AI facial recognition technology to prevent retail theft.

Rite Aid said it disagrees with the allegations related to the facial recognition technology.

“We are pleased to reach an agreement with the FTC and put this matter behind us,” the company said by statement. “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. 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.”

The ban will be in place for five years.

The settlement was reached as Rite Aid is going through Chapter 11 bankruptcy proceedings. It is subject to approval by the U.S. Bankruptcy Court overseeing Rite Aid’s ongoing restructuring and the U.S. Federal District Court in which the FTC filed its complaint.

The order will go into effect after approvals from both courts, as well as modification of a 2010 order by the FTC. The FTC also charged Rite Aid with violation of a 2010 data security order by allegedly failing to adequately oversee its service providers. Rite Aid will be required to implement a robust information security program, which must be overseen by the company’s top executives.

WHY THIS MATTERS

Rite Aid was banned from using AI facial recognition, because the retailer deployed the technology without reasonable safeguards, according to the FTC in the complaint and order filed in the Eastern District of Pennsylvania.

The technology falsely tagged consumers as shoplifters, particularly women and people of color, the FTC said. 

In the complaint, the FTC said that from 2012 to 2020, Rite Aid deployed artificial intelligence-based facial recognition technology to identify customers who may have been engaged in shoplifting or other problematic behavior. The complaint, however, charges that the company failed to take reasonable measures to prevent harm to consumers, who, as a result, were erroneously accused by employees of wrongdoing because facial recognition technology falsely flagged the consumers as matching someone who had previously been identified as a shoplifter or other troublemaker.

The company did not inform consumers that it was using the technology in its stores, and employees were discouraged from revealing such information, 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, according to the complaint.

In addition, the FTC says Rite Aid’s actions disproportionately impacted people of color.

The AI facial recognition technology was used in hundreds of stores. The system generated thousands of false-positive matches, 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,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. 

THE LARGER TREND

The Commission voted 3-0 to authorize staff to file the complaint and the proposed stipulated order against Rite Aid. 

Preventing the misuse of biometric information is a high priority for the FTC, which issued a warning earlier this year that the agency would be closely monitoring this sector. 
 

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org