Rite Aid banned from use of facial recognition in stores after thousands of false matches

Drugstore chain Rite Aid has accepted a ban of its use of facial recognition software for five years due to false accusations stemming from the technology that disproportionately affected people of color, the Federal Trade Commission said.

The retailer failed to impose reasonable precautions in its deployment of facial recognition, resulting in thousands of false-positive matches with customers accused of shoplifting and other inappropriate behavior, a legal complaint from the FTC said.

Acting on false-positive alerts, employees followed consumers around its stores, searched them, accused them of wrongdoing in front of friends and family, and called the police to remove them, the complaint said.

The company also chose not to inform customers of its use of facial recognition and discouraged employees from doing so, the FTC said.

"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," Samuel Levine, director of the FTC's Bureau of Consumer Protection, said in a statement.

"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.

In a statement, the company said it was "pleased to reach an agreement" with the FTC. However, Rite Aid added: "We fundamentally disagree with the facial recognition allegations in the agency's complaint."

"Rite Aid's mission has always been and will continue to be to safely and conveniently serve the communities in which we operate," the company said.

In all, Rite Aid collected tens of thousands of images of individuals, many of which were low-quality, the complaint said, noting that the activity took place between 2012 to 2020.

Mistakes made by the company's technology included false matches with an image collected thousands of miles away, as well as an incorrect positive result flagged at dozens of stores nationwide, the complaint added.

Rite Aid violated the terms of a 2010 agreement reached with the FTC after a finding that the company had failed to protect sensitive financial and medical information, the agency said.

The FTC issued a warning earlier this year that the company would be closely monitoring issues around the collection of data tied to individuals' physical characteristics, the agency said.

In addition to complying with the five-year ban, Rite Aid said it will impose safeguards for future use of its surveillance systems.

Those safety measures include deleting photos previously collected by its facial recognition software, informing customers when their physical characteristics are entered into a store database and providing notice to customers about use of the technology at a given location.