The Federal Trade Commission (FTC) has reached a proposed settlement with pharmacy chain Rite Aid, banning it from using facial recognition technology for the next five years. The settlement follows charges that Rite Aid’s facial recognition system lacked appropriate safeguards and falsely tagged customers as shoplifters. Rite Aid will also be required to implement a robust information security program overseen by top executives when using biometric information to track or flag consumers as security risks. If the company fails to control potential risks, it must permanently discontinue the use of the technology. According to the FTC, the order is its first move to regulate biases in AI technologies. The complaint alleged that from 2012 to 2020, Rite Aid deployed facial recognition technology across hundreds of retail pharmacies to identify customers it had previously labelled as likely shoplifters. The technology generated false positives more frequently in predominantly Black and Asian neighborhoods than in predominantly white communities. Rite Aid’s actions subjected consumers to embarrassment, harassment, and other harm, with some individuals detained, searched, and banned from stores. In addition, Rite Aid failed to implement an adequate information security program as required by a 2010 data security order with the FTC. As part of the proposed settlement, Rite Aid must delete images collected by its facial recognition system and notify shoppers when biometric data is gathered. Rite Aid filed for bankruptcy in October 2023 and plans to close nearly 200 stores.
