FTC Bans Rite Aid from Using AI Facial Recognition

On December 19, 2023, the Federal Trade Commission and Rite Aid agreed that Rite Aid will be banned from using facial recognition technology for surveillance purposes for five years to settle FTC charges that the retailer failed to implement reasonable safeguards to prevent its consumers from being falsely identified as shoplifters.

In a complaint filed in the Eastern District of Pennsylvania, the FTS alleged that from approximately October 2012 to July 2020, Rite Aid used facial recognition technology in hundreds of its retail pharmacy locations to identify consumers that it had previously deemed likely to engage in shoplifting or other criminal behavior.  The technology generated alerts sent to store employees, indicating that individuals who had entered Rite Aid stores were matches for entries in Rite Aid’s watchlist database.  Thousands of these alerts were “false-positive matches – that is, alerts that incorrectly indicated that a consumer was a ‘match’ for an enrollment in Rite Aid’s database of individuals suspected or accused of wrongdoing.”  According to the FTC, these false alerts disproportionately impacted Black, Asian, Latino, and women consumers.