Biometrics In Retail: Part 2

Part 2: Practical Compliance Considerations and What’s Next

Biometric technologies are being deployed across a range of retail functions—from loss prevention and employee authentication to marketing and customer analytics—and are subject to an expanding body of state laws. As we discussed in Part 1 of this 2-part series, how such data is used—particularly whether for security or marketing—often determines the level of regulatory scrutiny and risk exposure.

For retailers, clearly scoping and governing these technologies from the outset is critical. “Biometrics sit at the intersection of cybersecurity, AI governance, and privacy regulation,” explains Caroline McCaffery, Partner and Practice Lead for OGC’s AI, Cybersecurity and Privacy group. “As AI tools become more sophisticated, it is increasingly important for retailers to map where biometric data is collected, how it is used, and who has access to it, so they can put practical controls in place and reduce both compliance and security risk.”

Programs that are not aligned with their intended use can create risk where deployment extends beyond those original parameters.

Practical Compliance Considerations

As more states take steps to regulate biometric data collection, often with statutory penalties for noncompliance, many retailers are treating biometric initiatives as higher-risk initiatives.

For companies operating across multiple jurisdictions, a common approach is to calibrate programs to the most restrictive applicable standards.

Key considerations often include:

• Data mapping and risk assessment
  Understanding where, how, and why biometric data is collected, used, stored, and shared is often a foundational step in evaluating risk.
• Clear delineation of use cases
  Distinguishing between security-related uses and marketing or analytics applications, with documentation supporting the intended purpose and technical controls that limit function creep.
• Notice and consent mechanisms
  Developing clear, audience-specific (employees vs. customers) disclosure notices and consent mechanisms.
• Written policies and data lifecycle management
  Establishing documented biometric policies addressing data retention, deletion, and governance.
• Vendor management and contracting
  Strengthening vendor management processes and contract requirements to address third-party providers who will be managing or supplying biometric tools or processing such data.
• Insurance and risk transfer
  Evaluating whether existing cyber insurance coverage extends to biometric-related claims and regulatory investigations.
• Use limitations
  Considering the implications of monetizing biometric data, which may trigger additional legal and reputational risk.
• Training and internal alignment
  Providing training to employees and vendors to support consistent implementation and compliance.
• Ongoing monitoring and updates
  Tracking legislative developments and updating internal practices and training as requirements evolve.

Looking Ahead: Emerging Trends

As biometric technologies continue to evolve, continued regulatory and legal developments can be expected, particularly with respect to:

• Expansion of biometric-specific laws
  More states are considering legislation modeled on laws like Illinois’ Biometric Information Privacy Act (BIPA), including versions private rights of action which are often a driver of class action litigation.
• Greater scrutiny of “security” use cases
  Regulators are increasingly focused on whether biometric tools characterized as “security” measures are narrowly tailored, or whether they function in practice as broader tracking or profiling tools.
• Heightened protections for minors
  As protections for children and teens expand at both the state and federal level, retailers that employ the use of cameras or biometric analytics in settings frequented by younger consumers (e.g., malls, entertainment venues, youth-focused brands) may face additional compliance obligations.
• Intersection with AI regulation
  Many biometric tools deployed in retail environments rely on AI and machine learning, bringing them within the scope of emerging AI governance frameworks—particularly around transparency, bias, and automated decision-making and adding further compliance requirements.

Conclusion

Biometric technologies offer retailers opportunities to improve security, streamline operations, and enhance customer experience. At the same time, they introduce a set of legal and operational considerations that require careful management.

As Part 1 highlighted, the distinction between security and marketing uses is often central to how these technologies are regulated in practice. Retailers that take a structured approach—clearly defining use cases, aligning data practices with applicable requirements, and maintaining flexibility as laws evolve—are often better positioned to balance innovation with risk.

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