Rite Aid, a bankrupt retailer based in Philadelphia, has reached a settlement with the Federal Trade Commission (FTC) following charges that it had failed to implement proper safeguards for consumers when deploying facial-recognition technology in its stores. As part of the settlement, Rite Aid is prohibited from using facial-recognition technology for surveillance purposes for the next five years.

Rite Aid expressed satisfaction with the agreement, stating that it is pleased to put the matter behind them. Although the company acknowledged rolling out a facial-recognition pilot in a limited number of stores, it firmly disagreed with the allegations made by the FTC. Rite Aid clarified that it had discontinued the use of facial-recognition technology over three years ago, well before the FTC initiated its investigation.

According to the FTC's complaint, Rite Aid's facial-recognition system, which relied on artificial intelligence technology between 2012 and 2020, resulted in numerous instances of false accusations against consumers. The system often matched innocent individuals with known shoplifters, causing harm and distress. The complaint further revealed that the system generated thousands of false-positive matches and showed a higher likelihood of producing false positives in plurality-Black and Asian communities compared to white communities.

The terms of the settlement require Rite Aid to delete any images or photos collected by its facial-recognition system, inform customers if their information has been added to a database, remove any biometric information within five years, and institute a comprehensive data security program among other obligations.

The settlement will become effective after receiving approval from both bankruptcy and federal district courts.

By Ben Glickman

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