Rite Aid Faces FTC Ban Over Facial Recognition Misuse

Introduction

Rite Aid, a prominent pharmacy chain, has been banned from using facial recognition technology for five years following a settlement with the Federal Trade Commission (FTC). The decision comes after allegations that the company used an AI-powered facial recognition database to profile and harass customers.

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Background of the Case

Between 2012 and 2020, Rite Aid reportedly used a facial recognition database to identify customers it believed were shoplifters or "dishonest." The FTC accused the company of forcing employees to stalk and sometimes humiliate those wrongly identified by the system.

Rite Aid Banned from Using AI Facial Recognition After FTC Says Retailer Deployed Technology without Reasonable Safeguards

Rite Aid will be prohibited from using facial recognition technology for surveillance purposes for five years to settle Federal Trade Commission charges that the retailer failed t

Federal Trade CommissionJohn Newman & Amy Ritchie, Bureau of Competition

FTC's Allegations and Proposed Settlement

The FTC's complaint highlighted that Rite Aid did not take reasonable measures to prevent harm to consumers. The proposed order requires Rite Aid to implement comprehensive safeguards to prevent harm when deploying automated systems using biometric information for tracking or flagging individuals as security risks.

Rite Aid's Facial Recognition Database

Rite Aid contracted with two companies to build its facial recognition database, which included not only pictures but also names, birth years, and criminal background data of so-called persons of interest. The database, populated with tens of thousands of images, was criticized for its inaccuracy and the use of grainy images from various sources.

Rite Aid Reaches Settlement with FTC

Rite Aid Corporation (OTC: RADCQ) (“Rite Aid” or the “Company”) today announced it has reached a comprehensive settlement agreement with the U.S. Federal Trade Commission (“FTC”) regarding the Company’s historical use of facial recognition technology to prevent retail theft and issues relating to the Company’s compliance with a 2010 Commission Order. The Company issued the following statement: “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. 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. Rite Aid’s

Rite Aid Company Logo

Rite Aid's Response

Rite Aid announced its settlement with the FTC, stating it was pleased to put the matter behind them. The company, however, disagreed with the allegations, referring to the technology as part of a "pilot program" in a limited number of stores. Rite Aid ceased using the technology in these stores over three years ago.

Surveillance Concerns and Harms

FTC Commissioner Alvaro Bedoya emphasized the real-world harm caused by biased face surveillance, citing instances where false matches led to traumatizing searches of innocent individuals, including an 11-year-old girl.

FTC's Stand on Biometric Surveillance

The FTC's Bureau of Consumer Protection Director, Samuel Levine, stated that the order signals the agency's vigilance in protecting the public from unfair biometric surveillance and data security practices. The agency noted that Rite Aid's program disproportionately targeted minorities.

Implications for Privacy and Civil Rights

Privacy advocates view this case as a major stride for privacy and civil rights. John Davisson from the Electronic Privacy Information Center remarked that the FTC's strong message indicates that "algorithmic lawlessness is not an option anymore."

Industry Impact

The FTC's action against Rite Aid serves as a warning to the private sector about the use of automated decision-making systems, especially those that can cause substantial harm.

Conclusion

The FTC's ban on Rite Aid's use of facial recognition technology marks a significant development in the ongoing debate over privacy, technology, and consumer rights. This case underscores the need for responsible use of AI and biometric data, balancing technological advancements with ethical considerations and human rights.