Kmart has been notifying people of how they might capture shoppers’ facial biometrics. (Source: CHOICE)
Kmart has been raked over the coals over its use of facial recognition technology (FRT) on customers. The Office of the Australian Information Commissioner (OAIC) released a damning report on the retailer’s actions between 2020 and 2022.
Kmart used FRT in 28 of its stores to detect and prevent refund fraud, capturing thousands of shoppers’ biometric details without their consent. Bunnings was similarly criticised for the same practice in its efforts to clamp down on theft, fraud, and violent offenders.
But security, risk and communications expert Scott Taylor told Yahoo Finance that the OAIC’s findings are “ridiculous”.
“The Privacy Commissioner is completely out of touch, and I think the messaging with what they’re sharing about facial recognition is just ridiculous,” he said.
In Privacy Commissioner Carly Kind’s report, she ruled that Kmart’s use of FRT for fraud detection did not comply with the Privacy Act.
The Act stipulates that because biometric information is considered sensitive, businesses that use the technology have to “notify and have the consent of individuals, unless an exception applies”.
Kind noted that Kmart and Bunnings tried to rely on permitted general situations (PGS) as their exceptions, which, in this case, was to address “unlawful activity or serious misconduct, or to lessen or prevent a serious threat to the life, health or safety of any individual”.
Do you have a story? Email stew.perrie@yahooinc.com
“I concluded that the collection of biometric information on all people who entered the 28 Kmart stores, when only a small proportion may have been involved in or suspected of refund fraud, was a disproportionate interference with privacy,” the Commissioner wrote.
“I also considered that the FRT system had limited utility and there were other, less privacy-intrusive methods available to address refund fraud.”
While the OAIC has now ruled twice against the use of FRT in retail settings, Kind insisted that her Office didn’t want to see the technology banned.
Instead, she hoped the twin determinations “clarify the threshold for reliance on the exemptions” in the Privacy Act relating to gaining consent from customers.
“It is a high bar that must be cleared, and for good reason,” she said.
“The Privacy Act… is beneficial legislation that protects both individuals’ rights to privacy and the public interest in privacy. It rightly sets robust standards for the collection, use and disclosure of personal information, particularly sensitive information.”
Taylor pointed to how biometric data is captured and used in FRT and that it’s not the invasion of privacy that people might think it is.
He told Yahoo Finance he’s spoken to dozens of people recently who are worried about the concept of FRT in public places and businesses.
But the Praesidium Risk and Resilience Team founder said facial biometric data isn’t taking a photo of your face and putting it into a hard drive.
“A lot of the systems turn your face into numerical codes,” he said.
“Imagine that while you’re looking at the camera, it’s getting your details, and it says you’ve got 17 millimetres between your lip and your nose, you’ve got X amount between your eyebrows, your eyes are this wide…it converts that into a numerical code and that’s what is stored.”
Scott Taylor said FRT doesn’t capture your face in a picture per se, but notes certain biometric data points. (Source: Praesidium Risk and Resilience Team/CHOICE)
He said this technology can be instrumental in helping businesses address problematic behaviour when it’s needed the most.
“It’s going to lead to cheaper items because there’s less theft, and it’s going to mean your son, daughter, niece, nephew, whoever that’s working in hospitality or retail is going to be better alarmed and not walk into or deal with people who are pre- and regular violent offenders,” he added.
Taylor pointed to a review done in New Zealand in June after grocery chain Food Stuff started using FRT.
The trial ran from February to September in 25 supermarkets, and the cameras scanned roughly 226 million faces.
The company revealed that in 99.999 per cent of cases, those scans were deleted within one minute.
However, the technology was able to send 1,742 alerts to staff over potentially concerning customers, and 1,208 were confirmed matches to store watch lists.
Independent analytics firm Scarlatti revealed there was “strong quantitative evidence” that this technology reduced serious, harmful behaviour at those locations by about 16 per cent.
New Zealand’s Privacy Commissioner Michael Webster said there were still concerns around privacy, but, with effective safety rails in place, it could be used for good in retail and hospitality settings.
Rob Scott, CEO of Wesfarmers, which owns Bunnings, Kmart, Target, and Officeworks, revealed recently that retail theft was becoming an increasingly big thorn in its side.
“It’s not uniquely a Victorian issue, it is a national issue, but we are seeing that Victoria is a bit of a hotspot for this,” he said.
He added that this problem is extremely confronting for staff who have to deal with it and called for better allowances to combat the issue.
“There are different legislative approaches. There [are] different responses from a technology point of view that could reduce the incidence of retail crime and therefore make our stores much safer places to work and shop,” Scott said.
Retail theft has become a massive problem for retailers across the country. (Source: Bunnings) · Source: AAP/Bunnings
“So it is a real issue and… unfortunately, it’s consumers that pay for the higher prices of goods as a result of all of this crime.”
The Australian Retailers Association (ARA) found theft is rising to “crisis levels” and retail stores have become a top target.
There were 595,660 victims of theft in 2024, which was the highest number in 21 years, with almost half of all incidents occurring in retail settings.
“These numbers reflect what retailers know too well. We are confronting a full-scale retail crime crisis,” ARA CEO Chris Rodwell said.
“The fear and reality of retail crime is experienced daily.
“That’s why we’re calling for urgent and decisive action from our political leaders – including Premiers, Police Ministers and Attorneys General – to address this scourge of retail crime. We’ve seen the results when this action has been taken.”
Get the latest Yahoo Finance news – follow us on Facebook, LinkedIn and Instagram.