Rite Aid is now banned from using AI facial recognition tech. Here's why.

Rite Aid, the pharmaceutical chain that filed for Chapter 11 bankruptcy protections two months ago, has a new problem to deal with: the FTC. 

On Tuesday, the Federal Trade Commission announced that it was banning Rite Aid from using facial-recognition technology for surveillance over the next 5 years.

According to a complaint filed by the FTC, from 2012 to 2020, Rite Aid "deployed artificial intelligence-based facial recognition technology in order to identify customers who may have been engaged in shoplifting or other problematic behavior."

However, the FTC stated that Rite Aid "failed to take reasonable measures to prevent harm to consumers." 

Rite Aid falsely flagged innocent shoppers as thieves

Rite Aid shoppers who had done nothing wrong were monitored, harassed, and accused of shoplifting by employees when the store's facial-recognition technology falsely flagged innocent consumers. The most affected were women and people of color, predominantly those in Black and Asian communities.

The FTC said Rite Aid did not inform store visitors about its use of facial-recognition technology nor the collection of their biometric information just from visiting a Rite Aid location. Employees were "discouraged" from sharing its monitoring policy with consumers as well.

According to the FTC, employees received alerts when the facial-recognition technology flagged a consumer as a prior troublemaker. After being alerted, these employees "followed consumers around its stores, searched them, ordered them to leave, called the police to confront or remove consumers, and publicly accused them, sometimes in front of friends or family, of shoplifting or other wrongdoing."

Tens of thousands of images of Rite Aid consumers were collected over the years, according to the FTC. The images came from security cameras, employee phone cameras, and media coverage in the press.

Thousands of false-positive matches were made with this system, the FTC said. The agency provided examples of customers being flagged based on matches made in previous locations thousands of miles. Sometimes, the system flagged an individual at "dozens of different stores all across the United States."

In addition to being prohibited from using facial-recognition technology over the next 5 years, the FTC is also requiring Rite Aid to delete any videos and photos it has stored. Biometric data must also be deleted. If Rite Aid deploys facial recognition for security after the ban is lifted, the company must notify customers, implement a data security program, and undergo independent assessments and review.