RADCQ Rite Aid Corporation (CE)

By Ben Glickman

Rite Aid has been banned from using facial-recognition technology for surveillance purposes for five years as part of a settlement with the Federal Trade Commission.

The bankrupt retailer on Tuesday settled charges by the FTC that it had failed to put in place safeguards to prevent harm to consumers after it rolled out facial recognition in hundreds of stores.

Rite Aid said in a statement it was pleased to reach an agreement with the FTC and "put this matter behind us."

The Philadelphia-based company said it "fundamentally" disagrees with the allegations in the FTC's complaint because the company deployed a facial-recognition pilot in a "limited number of stores." Rite Aid said it stopped using the technology more than three years ago, before the FTC began its investigation.

The FTC's complaint alleged Rite Aid's artificial intelligence-based technology used between 2012 and 2020 led to consumers being false accused of wrongdoing, as they were matched with people previously known to be shoplifters.

The FTC said Rite Aid's system generated thousands of false-positive matches, and was more likely to return false positives in plurality-Black and Asian communities than in white ones.

The order by the FTC also requires Rite Aid to delete any images or photos collected by its facial-recognition system, notify customers if their information is being put into a database, delete any biometric information it collects within five years and put in place a data security program, among other things.

The order will take effect after it is approved by bankruptcy and federal district courts.

Write to Ben Glickman at ben.glickman@wsj.com

(END) Dow Jones Newswires

December 19, 2023 17:42 ET (22:42 GMT)

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