Rite Aid hit with five-year facial recognition ban over ‘reckless’ use

Rite Aid isn’t allowed to use AI-powered facial recognition technology for another five years as part of a settlement it reached with the Federal Trade Commission. In a complaint filed on Tuesday, the FTC accuses Rite Aid of using facial surveillance systems in a “reckless” manner from 2012 to 2020.

During this period, the FTC says Rite Aid used facial recognition technology to “capture images of all consumers as they entered or moved through the stores.” It then allegedly created a database of customers identified as shoplifters or exhibiting some other kind of suspicious behavior. For some customers, the database would have “accompanying information,” such as names, birth dates, and the activity deemed suspicious by the store, according to the complaint.

When a flagged shopper entered a Rite Aid store with facial recognition technology, the FTC says employees would receive a “match alert” sent to their mobile phones. As a result, Rite Aid employees allegedly followed customers around stores, performed searches, publicly accused them of shoplifting, and even asked the authorities to remove certain shoppers, according to the complaint. The FTC says Rite Aid falsely identified people as shoppers who had been previously flagged by the system, with incidents “disproportionality” impacting people of color.

Additionally, the pharmacy chain didn’t inform customers that it used facial recognition technology, while employees were “instructed employees not to reveal” this information, the complaint states. Most Rite Aid stores equipped with facial recognition technology were located in New York City, Los Angeles, Sacramento, Philadelphia, Baltimore, Detroit, Atlantic City, and a handful of other cities.

“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, the FTC’s Director of the Bureau of Consumer Protection says 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.”

In addition to a five-year ban from using facial recognition technology, the FTC’s proposed order requires Rite Aid to establish “comprehensive safeguards” to protect customers. The company must delete “all photos and videos” of customers collected by its facial recognition system, implement a data security program, and provide a written notice to customers who will have their biometric data enrolled in a database in the future, among other provisions. Since Rite Aid is currently going through bankruptcy proceedings, the FTC says the order will go into effect once the bankruptcy court and federal district court approve the measures.

Aside from Rite Aid, several retail stores have implemented facial recognition as a means to monitor guests. In 2021, 35 organizations banded together to demand that retailers like Albertsons, Macy’s, and Ace Hardware stop using the technology. Some states, including Maine, have carved out laws to regulate the use of facial recognition, while New York City requires that venues and retailers notify customers if biometric data collection is in use.