The FTC settled charges that Rite Aid deployed AI facial recognition technology in hundreds of stores from 2012 to 2020 without reasonable safeguards, resulting in false-positive matches that disproportionately harmed women and people of color. The proposed order bans Rite Aid from using facial recognition for surveillance for five years and requires comprehensive biometric data safeguards, data deletion, consumer notifications, and a certified security program.
Rite Aid is banned from using facial recognition for surveillance for five years, must delete all collected biometric images and derived algorithms, provide clear notice to consumers about its use, notify consumers when actions are taken based on the system, implement a comprehensive data security program overseen by executives, obtain independent third-party security assessments, and provide annual CEO certifications.
In-house legal teams should review all vendor agreements (especially with technology/AI providers), customer privacy policies, and any data processing agreements where biometric data or automated surveillance is involved. Specific clauses to scrutinize include: data processing specifications (particularly for biometric identifiers), consent mechanisms for surveillance, data retention and deletion schedules, breach notification protocols, audit rights, and representations/warranties regarding algorithmic fairness and accuracy. Given the FTC's order, contracts may need amendments to: (1) explicitly prohibit or restrict AI facial recognition for surveillance purposes, (2) mandate regular disparate impact assessments for automated systems, (3) require robust data minimization and deletion protocols for biometric data, (4) establish certified security programs aligned with FTC expectations, and (5) incorporate consumer notification requirements for false positives or data misuse. Teams should also assess termination rights if a vendor's technology poses uncorrectable consumer risks.
Entity
Rite Aid
Industry
RetailOfficial Press Release
https://www.ftc.gov/news-events/news/press-releases/2023/12/rite-aid-banned-using-ai-facial-recognition-after-ftc-says-retailer-deployed-technology-without
2023190 riteaid stipulated order filed
https://www.ftc.gov/system/files/ftc_gov/pdf/2023190_riteaid_stipulated_order_filed.pdf
2023190 riteaid complaint filed
https://www.ftc.gov/system/files/ftc_gov/pdf/2023190_riteaid_complaint_filed.pdf
Federal Trade Commission Enforcement Page
https://www.ftc.gov/enforcement
"Rite Aid will be prohibited from using facial recognition technology for surveillance purposes for five years to settle Federal Trade Commission charges"
"the retailer failed to implement reasonable procedures and prevent harm to consumers in its use of facial recognition technology"
"facial recognition technology falsely flagged the consumers as matching someone who had previously been identified as a shoplifter"
"Rite Aid’s facial recognition technology was more likely to generate false positives in stores located in plurality-Black and Asian communities than in plurality-White communities"
"Rite Aid will be prohibited from using facial recognition technology for surveillance purposes for five years"
"Delete, and direct third parties to delete, any images or photos they collected because of Rite Aid’s facial recognition system"
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$1.9M
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