FTC Settlement With Rite Aid Mandates AI System Assessment

In July, we noted that the Federal Trade Commission was an early mover in shaping standards for generative AI, having just served OpenAI with a Civil Investigative Demand seeking detailed responses to almost two hundred data requests,¹ consistent with FTC Chair Lina Khan's earlier pledge to "update our approach to keep pace with new learning technologies and technological shifts."²

This week, the FTC announced a proposed order that would settle its investigation into the Rite Aid chain of pharmacies use of AI-powered facial recognition technology. The order will replace and supersede a 2010 order imposed upon the company for failure to adequately protect the sensitive PHI of its customers by, among other things, improperly disposing of records containing PHI in ordinary trash.