A Rite Aid store stands in Brooklyn on August 28, 2023 in New York City.
Spencer Platt | Getty Images
The Federal Trade Commission proposed to bar Rite Aid from using facial recognition software in its drugstores for five years to settle allegations it improperly used the technology to identify shoplifters, the agency said Tuesday.
The FTC alleged that from 2012 to 2020, Rite Aid deployed facial recognition technology in hundreds of its retail pharmacies across several states in order to identify customers it had previously deemed likely to be shoplifting or engaging in other criminal activity. But the system generated thousands of false-positive matches, according to the FTC, resulting in some shoppers being mistakenly flagged as persons of interest.
Those individuals were detained or searched by Rite Aid employees, subjected to increased surveillance, publicly accused of criminal activity, reported to police, and in some cases banned from entering or making purchases at Rite Aid stores, the FTC alleged.
Rite Aid’s facial recognition technology was more likely to generate false positives in stores located in predominantly Black and Asian neighborhoods than in predominantly white communities, where 80% of Rite Aid stores are located, the FTC claims.
Rite Aid relied on facial technology from two undisclosed vendors, the agency said. It maintained a database of persons of interest that included images collected from security camera footage, driver’s licenses or government IDs, along with data such as names, years of birth, and “information related to criminal or ‘dishonest’ behavior in which individuals had allegedly engaged,” the FTC alleged in its complaint, which was filed in U.S. District Court for the Eastern District of Pennsylvania. There were “at least tens of thousands of individuals in its database,” the agency alleged.
As part of the proposed settlement, the FTC said Rite Aid must order third parties to delete images or photos collected by its facial recognition system, notify shoppers when biometric data is collected or used in connection with its security or surveillance systems, among other requirements. It will also require Rite Aid to permanently discontinue using the technology if it can’t control potential risks to consumers.
Rite Aid said in a press release that it’s pleased to reach an agreement with the FTC but that it disagrees with the agency’s allegations.
“The allegations relate to a facial recognition technology pilot program the Company deployed in a limited number of stores,” the company said, adding that it stopped using the technology more than three years ago, before the FTC initiated its investigation.
The FTC action comes after a Reuters investigation in 2020 detailed Rite Aid’s use of facial recognition technology in primarily lower-income, non-white neighborhoods. Reuters identified facial recognition software providers DeepCam and FaceFirst as RiteAid’s vendors. FaceFirst’s technology routinely misidentified Black individuals as shoplifters, the Reuters investigation found.
Privacy and civil liberties advocates continue to raise alarms around the use of facial recognition software and the need for further regulation. The technology has led to increased surveillance, and numerous studies have shown the artificial intelligence underpinning the technology is more likely to misidentify people of color, leading to wrongful arrests.
The proposed settlement is subject to approval by a court overseeing Rite Aid’s bankruptcy proceedings. The drugstore chain filed for Chapter 11 bankruptcy protection in October amid slowing sales, rising debt and lawsuits alleging it contributed to the U.S. opioid epidemic.
Paxton sued Google in 2022 for allegedly unlawfully tracking and collecting the private data of users.
The attorney general said the settlement, which covers allegations in two separate lawsuits against the search engine and app giant, dwarfed all past settlements by other states with Google for similar data privacy violations.
Google’s settlement comes nearly 10 months after Paxton obtained a $1.4 billion settlement for Texas from Meta, the parent company of Facebook and Instagram, to resolve claims of unauthorized use of biometric data by users of those popular social media platforms.
“In Texas, Big Tech is not above the law,” Paxton said in a statement on Friday.
“For years, Google secretly tracked people’s movements, private searches, and even their voiceprints and facial geometry through their products and services. I fought back and won,” said Paxton.
“This $1.375 billion settlement is a major win for Texans’ privacy and tells companies that they will pay for abusing our trust.”
Google spokesman Jose Castaneda said the company did not admit any wrongdoing or liability in the settlement, which involves allegations related to the Chrome browser’s incognito setting, disclosures related to location history on the Google Maps app, and biometric claims related to Google Photo.
Castaneda said Google does not have to make any changes to products in connection with the settlement and that all of the policy changes that the company made in connection with the allegations were previously announced or implemented.
“This settles a raft of old claims, many of which have already been resolved elsewhere, concerning product policies we have long since changed,” Castaneda said.
“We are pleased to put them behind us, and we will continue to build robust privacy controls into our services.”
Virtual care company Omada Health filed for an IPO on Friday, the latest digital health company that’s signaled its intent to hit the public markets despite a turbulent economy.
Founded in 2012, Omada offers virtual care programs to support patients with chronic conditions like prediabetes, diabetes and hypertension. The company describes its approach as a “between-visit care model” that is complementary to the broader health-care ecosystem, according to its prospectus.
Revenue increased 57% in the first quarter to $55 million, up from $35.1 million during the same period last year, the filing said. The San Francisco-based company generated $169.8 million in revenue during 2024, up 38% from $122.8 million the previous year.
Omada’s net loss narrowed to $9.4 million during its first quarter from $19 million during the same period last year. It reported a net loss of $47.1 million in 2024, compared to a $67.5 million net loss during 2023.
The IPO market has been largely dormant across the tech sector for the past three years, and within digital health, it’s been almost completely dead. After President Donald Trump announced a sweeping tariff policy that plunged U.S. markets into turmoil last month, taking a company public is an even riskier endeavor. Online lender Klarna delayed its long-anticipated IPO, as did ticket marketplace StubHub.
But Omada Health isn’t the first digital health company to file for its public market debut this year. Virtual physical therapy startup Hinge Health filed its prospectus in March, and provided an update with its first-quarter earnings on Monday, a signal to investors that it’s looking to forge ahead.
Omada contracts with employers, and the company said it works with more than 2,000 customers and supports 679,000 members as of March 31. More than 156 million Americans suffer from at least one chronic condition, so there is a significant market opportunity, according to the company’s filing.
In 2022, Omada announced a $192 million funding round that pushed its valuation above $1 billion. U.S. Venture Partners, Andreessen Horowitz and Fidelity’s FMR LLC are the largest outside shareholders in the company, each owning between 9% and 10% of the stock.
“To our prospective shareholders, thank you for learning more about Omada. I invite you join our journey,” Omada co-founder and CEO Sean Duffy said in the filing. “In front of us is a unique chance to build a promising and successful business while truly changing lives.”
Liz Reid, vice president, search, Google speaks during an event in New Delhi on December 19, 2022.
Sajjad Hussain | AFP | Getty Images
Testimony in Google‘s antitrust search remedies trial that wrapped hearings Friday shows how the company is calculating possible changes proposed by the Department of Justice.
Google head of search Liz Reid testified in court Tuesday that the company would need to divert between 1,000 and 2,000 employees, roughly 20% of Google’s search organization, to carry out some of the proposed remedies, a source with knowledge of the proceedings confirmed.
The testimony comes during the final days of the remedies trial, which will determine what penalties should be taken against Google after a judge last year ruled the company has held an illegal monopoly in its core market of internet search.
The DOJ, which filed the original antitrust suit and proposed remedies, asked the judge to force Google to share its data used for generating search results, such as click data. It also asked for the company to remove the use of “compelled syndication,” which refers to the practice of making certain deals with companies to ensure its search engine remains the default choice in browsers and smartphones.
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The DOJ also proposed the company divest its Chrome browser but that was not included in Reid’s initial calculation, the source confirmed.
Reid on Tuesday said Google’s proprietary “Knowledge Graph” database, which it uses to surface search results, contains more than 500 billion facts, according to the source, and that Google has invested more than $20 billion in engineering costs and content acquisition over more than a decade.
“People ask Google questions they wouldn’t ask anyone else,” she said, according to the source.
Reid echoed Google’s argument that sharing its data would create privacy risks, the source confirmed.
Closing arguments for the search remedies trial will take place May 29th and 30th, followed by the judge’s decision expected in August.
The company faces a separate remedies trial for its advertising tech business, which is scheduled to begin Sept. 22.