Rite Aid banned from using AI facial recognition tech after it incorrectly flagged customers as shoplifters: 'Reckless'

The Federal Trade Commission announced Tuesday that pharmacy chain Rite Aid is prohibited from using artificial intelligence-powered facial recognition after the technology incorrectly flagged customers as shoplifters in over a thousand instances.

Rite Aid, which filed for Chapter 11 bankruptcy protection in October, deployed facial recognition software in roughly 200 store locations from 2012 to 2020.

According to a 2020 report from Reuters, the pharmacy chain installed the technology in mostly "lower-income, non-white neighborhoods" in Democratic-led New York and Los Angeles. Rite Aid defended its use of the technology and insisted that the decision on where to deploy the software was "data-driven" and based on the location's crime statistics.

Samuel Levine, the director of the FTC's Bureau of Consumer Protection, stated, "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."

"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 added.

According to a federal court complaint, Rite Aid launched the security measures to prevent shoplifting at some of its most problematic locations. However, the inaccuracy of the technology led to law-abiding customers being accused of theft.

"The company failed to take reasonable measures to prevent harm to consumers, who, as a result, were erroneously accused by employees of wrongdoing because facial recognition technology falsely flagged the consumers as matching someone who had previously been identified as a shoplifter or other troublemaker," the FTC explained.

Shoppers were reportedly subjected to "embarrassment, harassment, and other harm," the complaint alleged. Additionally, Rite Aid customers were not informed that the technology was in use. Store staff followed and searched wrongfully suspected shoppers due to the faulty facial recognition software. Some individuals were even ordered to leave and confronted by law enforcement officers.

"Rite Aid contracted with two companies to help create a database of images of individuals — considered to be 'persons of interest' because Rite Aid believed they engaged in or attempted to engage in criminal activity at one of its retail locations — along with their names and other information such as any criminal background data," the FTC continued.

The AI-powered software generated thousands of incorrect matches, the complaint alleged.

As part of a settlement agreement over the alleged misuse of the software, Rite Aid has been banned from using facial recognition technology for surveillance purposes for five years.

In a Tuesday statement, Rite Aid said in part, "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."

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