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"
The FTC filed a complaint alleging that GovAssist LLC, Entry LLC, and Scott Zuckerman used deceptive paid search ads, misleading service and pricing claims, and fake reviews to deceive consumers seeking passport services. The complaint alleges violations of the FTC Act, the Impersonation Rule, and the Gramm-Leach-Bliley Act; the case will be decided by the court, and no penalty or remedy is reported as imposed.
The FTC issued its annual report to Congress describing fraud trends affecting older adults and the agency’s enforcement, education, and outreach efforts. The report is not a specific privacy enforcement action and announces no penalty or remedy.
The FTC referred a complaint against REPS & Company Inc. and company executives, alleging they bypassed ticket-issuer security controls and purchasing limits to acquire millions of tickets for resale. The complaint was filed by the Department of Justice, and the case will be decided by the court; the press release does not report a penalty or other remedy imposed.
$106.8M
A federal court entered a $106.8 million default judgment against corporate defendants in an alleged debt-relief scheme that impersonated banks and government entities and targeted seniors and veterans. The judgment permanently bans the defendants from the debt-relief industry and imposes additional prohibitions, including on impersonation, telemarketing, and misrepresentations.
The FTC sued Digital Forensics Corporation LLC and affiliated defendants, alleging they misled sextortion victims with promises of investigative and monitoring services that often were not provided, and used fake positive reviews. A federal court granted the FTC’s request to temporarily halt the defendants’ activities; the complaint remains for the court to decide.
The FTC alleged that Greenway Auto Group advertised vehicle prices thousands of dollars below the amounts consumers actually paid and used mailers falsely suggesting recipients had won cash prizes. Greenway agreed to an order requiring transparent pricing and prohibiting deceptive prize mailers and other misrepresentations; the press release does not state a monetary penalty.