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July 28 (Reuters) - 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
technologys 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 Aids 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 technologys utility.
Reuters pieced together how the companys 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
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
vendors 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 they visited with the facial
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 agencys 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
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
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
Cathy Langley, Rite Aids 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 companys 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.
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 https://www.reuters.com/article/us-usa-crime-face/u-s-government-study-finds-racial-bias-in-facial-recognition-tools-idUSKBN1YN2V1
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. Senates intelligence committee, told Reuters
in a statement that the Rite Aid systems potential link to
China was outrageous. The Chinese Communist Partys buildup
of its Orwellian surveillance state is alarming, and Chinas
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
governments hands, helping Beijing to 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, Chinas 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
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
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 Aids 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 Aids 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.
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 doesnt 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 youre wearing your headband like another person
is wearing a headband, youre going to get a hit.
FaceFirsts 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
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.
Of the 65 stores the retailer targeted in its first big
rollout, 52 were in areas where the largest group was Black or
Latino, according to Reuters analysis of a Rite Aid planning
document from 2013 that was read aloud to a reporter by someone
with access to it. Reuters confirmed that some of these stores
later deployed the technology but did not confirm its presence
at every location on the list.
Separately, two former Rite Aid managers and a third source
familiar with the FaceFirst rollout said the systems were
concentrated, respectively, in the tougher, toughest or
Reuters reviewed a 2016 spreadsheet from the companys asset
protection unit in which Rite Aid rated 20 higher-earning
Manhattan stores as having equal risk of loss labeled
MedHigh. Two of 10 stores where whites were the largest racial
group had facial recognition technology when Reuters visited
this year, whereas eight of the 10 in non-white areas had the
One spot ranked "MedHigh" was a store at 741 Columbus Avenue
in New Yorks whiter, wealthier Upper West Side. Another was the
pharmacys West 125th Street store in nearby Harlem, a majority
African-American neighborhood. The Harlem store got facial
recognition technology; the Upper West Side one did not, as of
(See graphics here https://tmsnrt.rs/2EpMRhF?losangeles=true
and here https://tmsnrt.rs/2EpMRhF?manhattan=true and here
'LOOKS NOTHING LIKE ME
Starting in 2013, as Rite Aid deployed FaceFirsts
technology in Philadelphia, Baltimore and beyond, some serious
drawbacks emerged, current and former security agents and
managers told Reuters.
For instance, the system would generate 500 hits in an hour
all across the United States when photos in the system were
blurry or taken at an odd angle, one of the people familiar with
FaceFirsts operations said.
FaceFirsts Trepp said the company has high accuracy rates
while running over 12 trillion comparisons per day without any
known complaints to date.
During that earlier period, Tristan Jackson-Stankunas said
Rite Aid wrongly fingered him as a shoplifter in a Los Angeles
store based on someone elses photo. While Reuters could not
confirm the method Rite Aid used to identify him, the store had
FaceFirst technology by that time, according to a Rite Aid
security agent and a Foursquare review photo showing the camera.
According to a complaint Jackson-Stankunas filed with the
California Department of Consumer Affairs a week after the
incident, he was looking for air freshener in September 2016
when a manager ordered him to leave the store. The manager said
he had received a security image of Jackson-Stankunas taken at
another Rite Aid in 2013 from which he allegedly had stolen
goods, according to the complaint.
When Jackson-Stankunas viewed the photo on the managers
phone, he told Reuters, he saw nothing in common with the person
except their race: Both are Black.
The guy looks nothing like me, said Jackson-Stankunas, 34,
who ultimately was allowed to make his purchase and leave the
store. Rite Aid only identified me because I was a person of
color. Thats it.
The California department told him his complaint fell
outside its purview, directing him to another state office,
email records show. Instead, he said he decided to write the
store a bad review on Yelp.
Rite Aid and the manager who allegedly was involved declined
to comment on Jackson-Stankunas account.
At one store Reuters visited, a security agent scrolled
through FaceFirst alerts showing a number of cases in which
faces were obviously mismatched, including a Black man mixed up
with someone who was Asian. Reuters could not determine whether
the incorrect matches resulted in confrontations with customers.
FaceFirst CEO Trepp said that his company takes racial bias
seriously and would not work with any business that disregarded
civil rights. We cannot stand for racial injustice of any kind,
including in our technology, he said.
Generally, Trepp said, Reuters findings about his company
contained extensive factual inaccuracies and are not based
upon information from credible sources.
A NEW SYSTEM
Early in 2018, Rite Aid began installing technology from
DeepCam LLC, ultimately phasing out FaceFirst in stores around
the country, interviews with Rite Aid loss prevention agents and
internal vendor documents indicate.
Six security staffers who used both systems said DeepCams
matches were more accurate sometimes to a fault. The
technology picked up faces from ads on buses or pictures on
T-shirts, three said. One famous face captured in DeepCam was
Marilyn Monroes, one of the agents said.
At least until 2017, FaceFirst had employed an older method
of biometric identification that compared maps of subjects
faces, two people familiar with its system said. Only later did
it move over to software based on artificial intelligence like
DeepCams. Though the data and algorithms differ by brand, these
systems draw upon potentially millions of samples to learn how
to match faces.
DeepCam cameras photographed and took live video of every
person entering a Rite Aid store, aiming to create a unique
facial profile, Rite Aid agents said. If the customer walked in
front of another DeepCam facial recognition camera at a Rite Aid
shop, new images were added to the persons existing profile.
Two agents said they lost access to the images after 10 days
unless the person landed on a watch list based on their behavior
When agents saw someone commit a crime or just do
something suspicious, one said they scrolled through profiles
on their smartphone to search for the individual, only adding
the person to the watch list with a managers approval. The next
time the shopper walked into a Rite Aid that had the technology,
agents received a phone alert and checked the match for
accuracy. Then they could order the person to leave, agents told
Rite Aid said adding customers to the watch list was based
on multiple layers of meaningful human review. The company
told Reuters its procedures ensured customers were not
If a person was found to be engaging in criminal behavior,
Rite Aid said, we retain the data as a matter of policy to
cooperate in pending or potential criminal investigations.
Other U.S. retail stores have tried DeepCam. Independent
7-Eleven franchise owners in Virginia told Reuters they
conducted trials of the software starting in 2018 and later
dropped it. They said they largely found the system accurate but
not user friendly and too expensive to maintain. The system was
advertised online as costing $99 a month.
7-Eleven Inc did not answer requests for comment.
THE CHINA CONNECTION
The two founding owners of U.S.-based DeepCam LLC were Don
Knasel and Jingfeng Liu, who set up the firm in Longmont,
Colorado, in 2017, state records show. Lius residential address
in Longmont was listed as its headquarters.
A Chinese native with U.S. citizenship and a doctorate from
Carnegie Mellon University, Liu had the skills to do business in
both the United States and China.
According to Chinas official business registration records,
he is chairman of another facial recognition firm in China
called Shenzhen Shenmu Information Technology Co Ltd, whose
website is DeepCam.com.
For a time, the U.S.-based DeepCam LLC and Shenzhen Shenmu
were closely connected: In addition to Lius role in both
companies, they shared the same website and email accounts,
according to internal records seen by Reuters.
Internal correspondence reviewed by Reuters suggests that
DeepCam reached a deal with Rite Aid by March 2018, when a
colleague emailed Knasel to congratulate him. Internal records
also indicated that China-based Shenzhen Shenmu helped its
American counterpart with product development and that Liu was
expected to pay at least some of the bills. That same month, a
U.S. executive wrote: Hi Jingfeng- Thanks for the credit card.
Here is the receipt for the Indianapolis Trade Show.
In an interview, Liu confirmed the financing, saying of
Knasel: Whenever he needed money, I give him some money. Liu
said Knasel told him about the Rite Aid project but left him in
the dark about the business. Knasel never let data cross
between the two countries, Liu said.
As the Rite Aid rollout proceeded in 2018, correspondence
among DeepCam staff, seen by Reuters, expressed concerns about
publicly revealing any links to China, as well as using the term
facial recognition in the U.S. market for fear of attracting
the attention of the American Civil Liberties Union.
Days after the ACLU wrote a March 2018 blog post https://www.aclu.org/blog/privacy-technology/surveillance-technologies/are-stores-you-shop-secretly-using-face
critical of retailers suspected use of the technology,
including Rite Aids, Knasel emailed staff: It looks like the
ACLU may be starting to stick its head up....We need to tone
down facial recognition, which I have tried to do....If they
come after us, we are dead....so we have to avoid. The
punctuation in the message is Knasels.
Today, both Liu and Knasel say no ties exist between the
U.S. and Chinese businesses.
We never do any business in USA, Liu wrote in a brief
email to Reuters in March. We focus in China market.
More recently, in an interview and an email, Liu said he had
not spoken with Knasel for more than a year and, to his
disappointment, had not benefited from the U.S. venture.
In a statement to Reuters, Knasel sought to distance himself
from Liu, Shenzhen Shenmu and DeepCam.
He did not address questions about DeepCams deal with Rite
Aid. DeepCam, he said, is winding up its operations and now
has no assets. He added that DeepCam never supplied China-based
Shenzhen Shenmu with any data.
In February, Rite Aid told Reuters that DeepCam had been
re-branded as pdActive. PdActive is a facial recognition
company run by Knasel, who said it is not a rebranding of
DeepCam but a different company that has no owners who are
Knasel remained connected to DeepCam through another company
he runs, dcAnalytics, which Knasel said licensed DeepCams
technology until November 2019. Since then, Knasel said,
U.S.-based dcAnalytics has been using proprietary technology,
as well as facial recognition cameras purchased from DeepCam.
Knasel said dcAnalytics is committed to upholding the
highest standards possible to make sure facial recognition
technology is used fairly, properly and responsibly.
Steve Dickinson, a Seattle attorney who practiced law in
China for more than a decade and writes about cybersecurity,
said geopolitical tensions have added sensitivity to any work
Chinese surveillance firms do in the United States.
Last year, the U.S. government blacklisted several Chinese
companies including Hikvision, one of the biggest
surveillance camera manufacturers globally alleging
involvement in human rights abuses. China has deployed facial
recognition cameras widely within its borders, providing a level
of monitoring unfathomable to many Americans.
At the time, a U.S. Hikvision spokesman said the firm
strongly opposes the decision and that punishing Hikvision
would harm its U.S. business partners and discourage global
companies from communicating with the U.S. government.
Liu described his company as nothing like the Chinese video
surveillance giants. With about 20 employees, he said, it is a
tiny company pretending to be big, struggling unsuccessfully to
get government contracts and nearly bankrupt.
Reuters found that he and his company have financial and
other ties to the Chinese government, however.
Most notably, Shenzhen Shenmus largest outside investor,
holding about 20% of its registered capital, is a strategic fund
set up by the government of China. Called the SME Development
Fund (Shenzhen Limited Partnership), it has built a 6 million
yuan ($855,000) stake in Shenzhen Shenmu since early 2018,
Chinese public business records show.
A person with the same name as a Shenzhen Shenmu board
director has also worked for the venture firm managing the SME
fund, according to the records and the investment firms
The fund acknowledged investing in Shenzhen Shenmu and said
it "does not participate in the daily operation and management
of the enterprise."
Liu is a member of Chinas Thousand Talents program,
according to a local government website. That program was
started by Beijing as a way to bring top academics working in
important fields abroad back to China. According to allegations
by the U.S. Justice Department, the program aimed to steal
In a statement, Chinas Ministry of Foreign Affairs
described such allegations as false and as stigmatization by
the United States.
Liu told Reuters he tried to get into the program but does
not know if he is. The achievement was reported in an article on
Shenzhen Shenmu's website, but Liu said he only wanted to use
the distinction to help him sell products. Reuters was unable to
confirm with Chinas government whether Liu was a member.
Another website, that of a Shenzhen Shenmu subsidiary,
Magicision, claims its technology has helped officials arrest
fugitives and suspected criminals in China.
Liu was vague about the firms public security work, saying
his company has tried unsuccessfully to get contracts with
Chinese law enforcement. He called the websites information
About the Chinese governments interest in his companys
data, however, he was clear.
The China government never care about us, he said. We are
I know (the) China threat is a hot, eyeball-attractive
topic. But what you have in mind is totally untrue.
(Reporting by Jeffrey Dastin in Los Angeles and New York; Data
analysis by Ryan McNeill in London; Additional reporting by Cate
Cadell and Yingzhi Yang in Beijing; Engen Tham and Brenda Goh in
Shanghai; Farah Master in Hong Kong; the Beijing and Shanghai
newsrooms; Lucas Jackson, Aleksandra Michalska and Samuel Hart
in New York; Paresh Dave in Oakland; and Tom Bergin in London;
Editing by Julie Marquis and Simon Robinson)