Over about eight years, the American drugstore chain Rite Aid Corp quietly added facial recognition systems to 200 stores across the United States, in one of the largest rollouts of such technology among retailers in the country, a Reuters investigation found.

In the hearts of New York and metro Los Angeles, Rite Aid deployed the technology in largely lower-income, non-white neighborhoods, according to a Reuters analysis. And for more than a year, the retailer used state-of-the-art facial recognition technology from a company with links to China and its authoritarian government.

In telephone and email exchanges with Reuters since February, Rite Aid confirmed the existence and breadth of its facial recognition program. The retailer defended the technology’s use, saying it had nothing to do with race and was intended to deter theft and protect staff and customers from violence. Reuters found no evidence that Rite Aid’s data was sent to China.

Last week, however, after Reuters sent its findings to the retailer, Rite Aid said it had quit using its facial recognition software. It later said all the cameras had been turned off.

“This decision was in part based on a larger industry conversation,” the company told Reuters in a statement, adding that “other large technology companies seem to be scaling back or rethinking their efforts around facial recognition given increasing uncertainty around the technology’s utility.”

Reuters pieced together how the company’s initiative evolved, how the software has been used and how a recent vendor was linked to China, drawing on thousands of pages of internal documents from Rite Aid and its suppliers, as well as direct observations during store visits by Reuters journalists and interviews with more than 40 people familiar with the systems’ deployment. Most current and former employees spoke on condition of anonymity, saying they feared jeopardizing their careers.

While Rite Aid declined to disclose which locations used the technology, Reuters found facial recognition cameras at 33 of the 75 Rite Aid shops in Manhattan and the central Los Angeles metropolitan area during one or more visits from October through July.

The cameras were easily recognizable, hanging from the ceiling on poles near store entrances and in cosmetics aisles. Most were about half a foot long, rectangular and labeled either by their model, “iHD23,” or by a serial number including the vendor’s initials, “DC.” In a few stores, security personnel – known as loss prevention or asset protection agents – showed Reuters how they worked.

The cameras matched facial images of customers entering a store to those of people Rite Aid previously observed engaging in potential criminal activity, causing an alert to be sent to security agents’ smartphones. Agents then reviewed the match for accuracy and could tell the customer to leave.

Rite Aid told Reuters in a February statement that customers had been apprised of the technology through “signage” at the shops, as well as in a written policy posted this year on its website. Reporters found no notice of the surveillance in more than a third of the stores it visited with the facial recognition cameras.

Among the 75 stores Reuters visited, those in areas that were poorer or less white were much more likely to have the equipment, the news agency’s statistical analysis found.

Stores in more impoverished areas were nearly three times as likely as those in richer areas to have facial recognition cameras. Seventeen of 25 stores in poorer areas had the systems. In wealthier areas, it was 10 of 40. (Ten of the stores were in areas whose wealth status was not clear. Six of those stores had the equipment.)

In areas where people of color, including Black or Latino residents, made up the largest racial or ethnic group, Reuters found that stores were more than three times as likely to have the technology.

The Reuters findings illustrate “the dire need for a national conversation about privacy, consumer education, transparency, and the need to safeguard the Constitutional rights of Americans,” said Carolyn Maloney, the Democratic chairwoman of the House oversight committee, which has held hearings on the use of facial recognition technology.

Rite Aid said the rollout was “data-driven,” based on stores’ theft histories, local and national crime data and site infrastructure.

Cathy Langley, Rite Aid’s vice president of asset protection, said earlier this year that facial recognition – which she referred to as “feature matching” – resulted in less violence and organized crime in the company’s stores. Last week, however, Rite Aid said its new leadership team was reviewing practices across the company, and “this was one of a number of programs that was terminated.”

‘Orwellian surveillance’

Facial recognition technology has become highly controversial in the United States as its use has expanded in both the public and private sectors, including by law enforcement and retailers. Civil liberties advocates warn it can lead to harassment of innocent individuals, arbitrary and discriminatory arrests, infringements of privacy rights and chilled personal expression.

Adding to these concerns, recent research by a U.S. government institute showed that algorithms that underpin the technology erred more often when subjects had darker skin tones.

Facial recognition systems are largely unregulated in the United States, despite disclosure or consent requirements, or limits on government use, in several states, including California, Washington, Texas and Illinois. Some cities, including San Francisco, ban municipal officials from using them. In general, the technology makes photos and videos more readily searchable, allowing retailers almost instantaneous facial comparisons within and across stores.

Among the systems used by Rite Aid was one from DeepCam LLC, which worked with a firm in China whose largest outside investor is a Chinese government fund. Some security experts said any program with connections to China was troubling because it could open the door to aggressive surveillance in the United States more typical of an autocratic state.

U.S. Senator Marco Rubio, a Florida Republican and acting chair of the U.S. Senate’s intelligence committee, told Reuters in a statement that the Rite Aid system’s potential link to China was “outrageous.” “The Chinese Communist Party’s buildup of its Orwellian surveillance state is alarming, and China’s efforts to export its surveillance state to collect data in America would be an unacceptable, serious threat,” he said.

The security specialists expressed concern that information gathered by a China-linked company could ultimately land in that government’s hands, helping Beijing refine its facial recognition technology globally and monitor people in ways that violate American standards of privacy.

“If it goes back to China, there are no rules,” said James Lewis, the Technology Policy Program director at the Washington-based Center for Strategic and International Studies.

Asked for comment, China’s Ministry of Foreign Affairs said: “These are unfounded smears and rumors.”

‘A promising new tool’

Rite Aid, afflicted with financial losses in recent years, is not the only retailer to adopt or explore facial recognition technology.

Two years ago, the Loss Prevention Research Council, a coalition founded by retailers to test anti-crime techniques, called facial recognition “a promising new tool” worthy of evaluation.

“There are a handful of retailers that have made the decision, ‘Look, we need to leverage tech to sell more and lose less,” said council director Read Hayes. Rite Aid’s program was one of the largest, if not the largest, in retail, Hayes said. The Camp Hill, Pennsylvania-based company operates about 2,400 stores around the country.

The Home Depot Inc said it had been testing facial recognition to reduce shoplifting in at least one of its stores but stopped the trial this year. A smaller rival, Menards, piloted systems in at least 10 locations as of early 2019, a person familiar with that effort said.

Walmart Inc has also tried out facial recognition in a handful of stores, said two sources with knowledge of the tests. Walmart and Menards had no comment.

Using facial recognition to approach people who previously have committed “dishonest acts” in a store before they do so again is less dangerous for staff, said Rite Aid’s former vice president of asset protection, Bob Oberosler, who made the decision to deploy an early facial recognition system at Rite Aid. That way, “there was significantly less need for law enforcement involvement,” he said.

‘Tougher’ neighborhoods

In interviews, 10 current and former Rite Aid loss prevention agents told Reuters that the system they initially used in stores was from a company called FaceFirst, which has been backed by U.S. investment firms.

It regularly misidentified people, all 10 of them said.

“It doesn’t pick up Black people well,” one loss prevention staffer said last year while using FaceFirst at a Rite Aid in an African-American neighborhood of Detroit. “If your eyes are the same way, or if you’re wearing your headband like another person is wearing a headband, you’re going to get a hit.”

FaceFirst’s chief executive, Peter Trepp, said facial recognition generally works well irrespective of skin tone, an issue he said the industry addressed years ago. He declined to talk about Rite Aid, saying he would not discuss any possible clients.

Rite Aid originally piloted FaceFirst at its store on West 3rd Street and South Vermont Avenue in Los Angeles, a largely Asian and Latino neighborhood, around 2012.