Rite Aid Banned from Using AI Facial Recognition by the FTC

Rite Aid has been banned from using facial recognition technology for surveillance purposes for five years, settling charges brought forth by the Federal Trade Commission (FTC). The FTC accused the retailer of failing to implement adequate safeguards, leading to harm and false accusations against consumers.

The proposed order mandates Rite Aid to establish comprehensive measures preventing harm to consumers when deploying automated systems using biometric information. If the technology cannot be controlled to mitigate potential risks, Rite Aid is required to discontinue its use. Additionally, Rite Aid must implement a robust information security program overseen by top executives to address violations of a 2010 data security order.

The FTC’s complaint, filed in federal court, revealed that Rite Aid deployed facial recognition technology from 2012 to 2020 to identify potential shoplifters. However, the company allegedly failed to take reasonable measures, resulting in erroneous accusations and harm to consumers. The system, which generated thousands of false positives, disproportionately impacted people of color. Rite Aid contracted with two companies to create a database, collecting tens of thousands of low-quality images from various sources.

The FTC highlighted multiple failures by Rite Aid, including the failure to consider and mitigate risks to consumers, inadequately test the accuracy of its technology, and use of low-quality images, increasing the likelihood of false-positive alerts. The retailer also allegedly neglected to monitor or test the technology post-deployment and failed to adequately train employees.

Apart from the ban on facial recognition technology, the proposed order mandates Rite Aid to delete collected images, notify consumers of biometric information enrollment, investigate and respond to consumer complaints, provide clear notice to consumers about surveillance technology, delete biometric information within five years, and implement a robust data security program.

The Commission voted unanimously to file the complaint and stipulated order against Rite Aid. The order will take effect pending approval from the bankruptcy court, federal district court, and modification of the 2010 order by the Commission, as Rite Aid is currently undergoing bankruptcy proceedings.

Information for this story was found via the FTC, Reuters, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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