Expert Column
FACIAL RECOGNITION IN RETAIL: INNOVATION OR INVASION?
By Ben Leitch, our CXO CyberConnections and Digital Content Manager
Retailers are constantly looking for ways to reduce losses, prevent fraud and optimise operations. Yet in the rush to adopt new technologies, some companies risk alienating the very customers they aim to serve. The recent controversy around Kmart in Australia illustrates this tension perfectly. Kmart’ s deployment of facial recognition technology to combat refund fraud has drawn legal scrutiny and public backlash, highlighting a broader ethical question: just because technology can do something, does that mean it should?
acial recognition has moved far beyond science
F fiction. Modern AI can identify individuals with astonishing accuracy, link them to historical transactions and flag anomalies in real-time. From a retailer’ s perspective, the benefits are obvious. Theft and refund fraud cost billions annually, and traditional deterrents – security guards, manual checks or CCTV monitoring – are slow, inconsistent and expensive. Automating detection through AI seems like a logical evolution. However, customers do not enter a store expecting to be scanned, profiled and tracked. for the retail industry’ s success. The public backlash, and the subsequent legal challenges, illustrates a simple truth – technology deployed without consent and transparency carries significant reputational and regulatory risk.
The debate isn’ t just about legality; it’ s about trust. Retailers live or die by the confidence customers place in them. Shoppers must believe their personal information is safe, that they are respected as individuals and that technology enhances rather than intrudes upon their experience. When a retailer crosses that line, the cost can be greater than the gains from prevented fraud. Kmart may save a few dollars on dishonest returns, but if the brand loses
Ben Leitch
consumer confidence, the financial impact could be orders of magnitude larger.
There is also a broader lesson here for the retail industry. Technology is a tool, not a mandate. Just because a solution exists does not mean it aligns with business values or customer expectations. Facial recognition in retail can have legitimate applications – such as loyalty programmes, personalised experiences or secure access for staff – but these must be implemented thoughtfully, with opt-in consent and clear communication. Anything less risks turning innovation into a liability.
Kmart’ s approach, while technically sophisticated, underestimated the social and ethical dimensions. Facial recognition may catch a small number of fraudsters, but it also captures millions of innocent shoppers. It effectively treats everyone as a potential suspect, creating an atmosphere of surveillance that runs counter to the trust essential
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