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Rite Aid is banned from using artificial intelligence (AI) facial recognition technology in its stores for five years after the Federal Trade Commission (FTC) ruled on December 19 that the company failed to take “reasonable” precautions to prevent harm to customers.
The technology, which was used in hundreds of stores between 2012 and 2020, frequently misidentified Rite Aid customers as shoplifters, causing the shoppers—mainly women and people of color—to be falsely accused of theft, 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.
Facial recognition technology has been shown to “perform less effectively for people with darker skin and women,” FTC Commissioner Alvaro Bedoya said in a statement.
Despite the fact that 80% of Rite Aid stores are in predominantly white areas, roughly 60% of the stores using the facial recognition technology were located in predominantly non-white areas, according to the FTC’s complaint.
The settlement agreement requires Rite Aid to implement “comprehensive safeguards” to prevent future mistakes by the AI technology, according to the FTC’s statement. Rite Aid’s CEO will also be required to submit to the FTC an annual certification documenting the company’s adherence to the safety protocols.
Because Rite Aid is currently going through bankruptcy proceedings, the settlement agreement is set to go into effect after the company gets approval from bankruptcy court and federal district court, according to the FTC.
“We are pleased to reach an agreement with the FTC and put this matter behind us,” Rite Aid executives said in a statement. “We respect the FTC’s inquiry and are aligned with the agency’s mission to protect consumer privacy.”
The statement added that Rite Aid disagrees with the FTC’s allegations, claiming the company used facial recognition technology in a “limited number of stores” and that it had stopped using the technology more than three years ago—before the FTC’s investigation began.