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FTC Bans Rite Aid from Using Facial Recognition Technology for 5 Years After False Shoplifting Allegations

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Dec 20, 2023

The Federal Trade Commission (FTC) has banned pharmacy chain Rite Aid from using facial recognition technology for five years, following an investigation that found the company’s use of the technology resulted in false accusations of shoplifting.

Rite Aid’s Reckless Use of Facial Recognition

Rite Aid deployed facial recognition systems in 200 stores starting in 2020, without first determining if the technology was accurate, resulting in false accusations against customers. As FTC Chair Lina Khan stated:

“Rite Aid’s facial recognition system wrongly accused innocent customers of shoplifting based on their race and age. The FTC is committed to fighting harmful commercial surveillance practices like these to protect consumers’ privacy and civil liberties.”

The FTC found that in some cases, all it took for someone to be falsely accused was walking near areas of stores that had high rates of “shrink”—retail industry loss from shoplifting, theft or administrative error.

Details of the FTC Settlement

Under its settlement with the FTC, Rite Aid is prohibited from:

  • Using facial recognition for fraud prevention for five years
  • Collecting, capturing, purchasing or sharing any facial recognition data collected from customers through a facial recognition service
  • Using third parties to test or deploy facial recognition services on Rite Aid’s behalf
  • Misrepresenting the extent to which it protects the privacy and confidentiality of personal or medical information

Additionally, Rite Aid will be required to delete any facial recognition data still in its possession.

Reactions from Privacy Advocates and Concerned Groups

The settlement has been praised by a range of advocates and groups concerned about the growth of facial recognition technology.

Fight for the Future’s Deputy Director Evan Greer stated:

“This settlement should send shockwaves through the retail industry and any companies still trying to sell invasive, racially biased surveillance tech. Facial recognition is too dangerous for it to be legal.”

The American Civil Liberties Union (ACLU), which has voiced concerns about the growth of facial recognition, said:

“This order also sends a strong message that the FTC is closely scrutinizing attempts to spy on consumers in stores. Companies should take note.”

Even some industry groups recognize the risks of poorly implemented facial recognition systems. Brian Dodge of the Retail Industry Leaders Association said:

“When used right with proper safeguards in place, tech can help retailers fight theft. But when deployed irresponsibly it can lead to negative consequences.”

Background Leading Up to Rite Aid’s Use and Bans of Facial Recognition

Rite Aid is not the first retailer to use facial recognition technology in its stores. Walmart used it in hundreds of stores before discontinuing it last November over “a number of potential risks.”

And Rite Aid isn’t the only pharmacy chain that has come under fire over its use of the technology. At the start of 2020, Clearview AI scraped social media for images to build an app sold to private companies and police departments to match photos against its database. Among its customers were Rite Aid and CVS. After public backlash, CVS said they had stopped using it.

The Broader Debate Around Facial Recognition Technology

Rite Aid’s ban comes amid a larger national debate around the use of facial recognition technology and risks that some claim outweigh the benefits. Studies have shown issues with racial bias, for example. In 2018, an MIT study found facial analysis programs from Microsoft, IBM and Megvii misidentified darker-skinned women as men 31% of the time.

More than a dozen cities have banned government use of facial recognition technology, including Boston, Minneapolis and San Francisco.

There are currently no federal laws governing the use of facial recognition. As calls for tighter rules and regulation continue, it remains to be seen whether Rite Aid will mark a turning point in its application for consumer services.

What Comes Next

While this settlement specifically applies to Rite Aid, privacy advocates will look to see if it influences practices around facial recognition usage more broadly across retail.

For Rite Aid, rebuilding customer trust around its privacy protections will be critical after this episode, especially within communities most impacted by false accusations stemming from its use of facial recognition tech.

Furthermore, with using facial recognition off the table for five years as it looks to reduce retail theft, Rite Aid will need to invest in skilled loss prevention officers and analytics. Striking the right balance between loss prevention and respecting consumer rights presents an industry-wide challenge.

Tables

Facial Recognition Bans Details
Boston Banned since 2020. Requires city council approval for departments to use surveillance tech going forward.
Minneapolis Ban passed in 2021 prohibits use of facial recognition by police and other city departments.
San Francisco Banned use by city police and other agencies in 2019. Set off wave of similar bans nationally.
Rite Aid Settlement Terms Description
5 year facial recognition ban Cannot use facial tech for fraud prevention
No collection or sharing of facial data Must delete any data still held
No 3rd party facial recognition services Includes testing or deploying tech with vendors
No false privacy protections claims FTC identified deceptive privacy promises around use of customer data
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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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