US pharmacist Rite Aid, which fell into bankruptcy this week, has been prohibited from using facial recognition technology for surveillance purposes for the next five years.

The US Federal Trade Commission (FTC) on Tuesday produced a damning report which accused the retailer, which operates about 2,000 retail pharmacies in 17 US states, of “reckless” use of the tech that “disproportionately impacted people of colour."

The report notes that Rite Aid deployed artificial intelligence-based facial recognition from 2012 to 2020 to identify shoplifters, but that the tech falsely flagged numerous consumers as matching previously identified shoplifters.

It goes on to accuse the company of failing to take reasonable measures to prevent harm to customers, and said that Rite Aid’s actions led to embarrassment and harassment for falsely identified customers.

Furthermore, the FTC said that the company’s actions were in violation of a 2010 data security order by failing to adequately oversee its service providers.

In a statement announcing the ruling, Samuel Levine, director of the FTC's Bureau of Consumer Protection, said: “Rite Aid's reckless use of facial surveillance systems left its customers facing humiliation and other harms, and its order violations put consumers' sensitive information at risk.”

With Rite Aid currently undergoing bankruptcy proceedings, the order will go into effect after receiving approval from courts.

A spokesperson for Rite Aid said: "The allegations relate to a facial recognition technology pilot program the company deployed in a limited number of stores. Rite Aid stopped using the technology in this small group of stores more than three years ago, before the FTC’s investigation regarding the Company’s use of the technology began."

The FTC’s decision could be precedent setting for the use of AI-informed facial recognition tech in public spaces going forwards.

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