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ARTICLE · 11 JANUARY 2024

The Crackdown Commences: The FTC's Case Against Rite Aid's Deployment Of AI-Based Technology

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On December 19, 2023, the U.S. Federal Trade Commission (FTC) put a big lump of coal in Rite Aid's stocking. The agency filed a complaint and proposed settlement...

United StatesTechnology
Peter J. Schildkraut
Peter J. Schildkraut
Alexis Sabet
Alexis Sabet
Nancy L. Perkins
Nancy L. Perkins
Alex Altman
Alex Altman
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On December 19, 2023, the U.S. Federal Trade Commission (FTC) put a big lump of coal in Rite Aid's stocking. The agency filed a complaint and proposed settlement regarding the pharmacy chain's use of artificial intelligence (AI)-based facial-recognition surveillance technology. The complaint alleges that Rite Aid violated Section 5 of the FTC Act, 15 U.S.C. § 45, by using facial-recognition technology to identify shoplifters in an unfair manner that harmed consumers. The FTC further alleges that Rite Aid violated a 2010 FTC settlement with Rite Aid (the 2010 Order), by failing to employ reasonable and appropriate measures to prevent unauthorized access to personal information. While some may have missed this news in the run-up to the holidays, it marks a major step by the FTC to discipline businesses deploying AI systems — and provides lessons for companies seeking to avoid similar consequences.

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