Rite Aid Settles with FTC Over Facial Recognition Technology, Faces Five-Year Ban

Pharmacy chain Rite Aid has agreed to a settlement with the Federal Trade Commission (FTC) following allegations of improper use of facial recognition technology. The FTC claimed that Rite Aid deployed AI-based facial recognition technology from 2012 to 2020 without taking adequate measures to prevent harm to consumers. The system, designed to identify potential shoplifters or individuals engaging in problematic behavior, allegedly led to false positives and caused employees to confront customers, leading to accusations of wrongdoing. The FTC further stated that Rite Aid failed to inform customers about the use of facial recognition technology in its stores, did not assess its accuracy before deployment, and inadequately trained employees on the technology, resulting in disproportionate impacts on people of color.

As part of the settlement, Rite Aid faces a five-year ban on using facial recognition technology for surveillance. The company and its third-party tech providers are required to delete any images collected by the facial recognition system, notify consumers about in-store biometric surveillance, and investigate and respond to consumer complaints related to AI-based surveillance. Additionally, the settlement mandates that Rite Aid implement an information security program and top executives oversee it, addressing violations of a 2010 FTC order.

Become a Subscriber

Please purchase a subscription to continue reading this article.

Subscribe Now

While Rite Aid disputed some of the FTC's allegations, the company expressed alignment with the agency's mission to protect consumer privacy and is pleased to have an agreement that resolves the matter. The settlement, subject to court approval, does not include financial penalties or fines. The FTC spokesperson noted that a 2021 U.S. Supreme Court decision limited the commission's tools for obtaining monetary relief but highlighted the strong injunctive relief in the settlement to protect consumers from potential future misuse of automated biometric technologies. Rite Aid, currently undergoing Chapter 11 bankruptcy, will require approval from the bankruptcy court for the FTC's order regarding the facial recognition settlement.

The case underscores the growing scrutiny of facial recognition technology and the importance of clear communication, ethical deployment, and safeguards to prevent adverse impacts on individuals, particularly in sensitive areas like retail settings. The settlement reflects the FTC's commitment to addressing unfair biometric surveillance practices and ensuring robust data security measures.