US drug store chain Rite Aid has been banned from using facial recognition technology to identify shoplifters after false claims led the FTC to investigate the company for consumer privacy violations.
Bankrupt US pharmacy chain Rite Aid will be prohibited from using facial recognition technology for surveillance purposes for five years to settle US Federal Trade Commission charges it harmed consumers, the FTC said on Tuesday.
Rite Aid deployed artificial intelligence-based facial recognition technology from 2012 to 2020 in order to identify shoplifters, but the company falsely flagged some consumers as matching someone who had previously been identified as a shoplifter, the FTC said.
According to the FTC, Rite Aid technology falsely tagged consumers, particularly women and people of color, as shoplifters.
“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,” Levine said.
Rite Aid’s actions subjected consumers to embarrassment, harassment, and other harm, according to the complaint.
The complaint also charged that Rite Aid did not inform its customers it was using the technology and discouraged employees from telling them.
The company collected tens of thousands of images of individuals, created databases of persons of interest, and generated thousands of false-positive matches, the FTC says.
Employees were said to have not only falsely accused customers of shoplifting, but followed those individuals around the stores, subjected them to searches, kicked them out of the stores, and even called the police, sometimes in front of other shoppers, friends, or family.
Rite Aid in a statement said the agreement with the FTC is subject to approval by the bankruptcy court overseeing its insolvency case.
"The allegations relate to a facial recognition technology pilot program the company deployed in a limited number of stores," the company said. "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 FTC’s complaint and ban followed a Reuters investigation from 2020 into Rite Aid’s facial recognition program.
That investigation found Rite Aid quietly added facial recognition systems to hundreds of stores in the United States and that in New York and Los Angeles, Rite Aid deployed the technology in largely lower-income, non-white neighborhoods.
After Reuters sent its findings to Rite Aid in July 2020, Rite Aid said it quit using its facial recognition software.
Rite Aid operates the third largest pharmacy chain in the United States, with about 4,900 retail pharmacies and an online pharmacy business.
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