Amazon and Walmart AI assistants detect Made in USA fraud but won't flag it, study reveals

AI Assistants Capable of Detecting Made in USA Fraud

Amazon and Walmart possess AI shopping assistants that can detect fake 'Made in USA' labels on their platforms, yet both retail giants are choosing not to deploy this capability to flag or remove fraudulent listings, according to a Columbia Law School study published by the Center for Law and the Economy 1

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. The research, which represents the first publication from the center launched after former FTC Chair Lina Khan returned to academia, examined how Alexa for Shopping and Sparky AI respond to questions about American-made products 2

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Researchers found that both AI assistants are capable of detecting mismatches between explicit country-of-origin claims and contradictory information buried elsewhere in product listings 1

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. The study also concluded that Made in USA fraud appears to be common across both e-commerce platforms 3

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. When researchers tested these systems by asking straightforward questions about American-made products, Amazon's chatbot often declined to answer while readily responding to equivalent questions about products manufactured in China 2

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. After rephrasing the same request, however, the chatbot returned American-made products using information that had been available all along.

Business Incentives Shape AI Deployment in Retail

When researchers queried the AI assistants about why their parent companies aren't doing more to combat false labeling, the responses revealed business calculations rather than technical limitations 1

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. Amazon's Alexa told researchers that "the harm to U.S.-made brands is real and documented, but until that harm creates a financial, regulatory, or reputational cost for Amazon specifically, it remains easier to do nothing" 1

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Walmart's Sparky offered a similarly revealing explanation, stating that the FTC typically enforces FTC rules against manufacturers rather than retailers. The chatbot then acknowledged, "That's a business calculation, not a legal justification" 1

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. Erie Meyer, senior fellow at the Center for Law and the Economy and one of the report's authors, explained that "the data was there, but the design was built to hide it" 2

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. These findings highlight how business incentives fundamentally shape AI deployment in retail, even as the technology grows more sophisticated.

Consumer Protection Concerns as AI Becomes Shopping Gatekeeper

The study arrives at a critical moment as retailers increasingly push shoppers toward AI-powered recommendations instead of traditional keyword searches 2

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. According to the research, neither Amazon nor Walmart currently offers shoppers a dedicated "Made in USA" filter, despite providing hundreds of other filtering options across many product categories 2

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. As AI shopping assistants become the primary interface for online shopping, the way they choose what information to surface or withhold could influence purchasing decisions on a massive scale.

Lina Khan emphasized that "even as AI tools continue to grow in sophistication and capability, business incentives will shape how these advancements get deployed. Policymakers and enforcers have a vital role to play to ensure the public doesn't get the short end of the stick" 1

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. FTC rules require products advertised as "made in USA" to be "all or virtually all" made in the United States 1

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. The FTC urged both retailers last year to crack down on third-party sellers' misleading labels, citing company policies requiring sellers to provide accurate information 1

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Retailer Responses and Regulatory Implications

In response to the study, an Amazon spokesperson stated that "country-of-origin information, when available, is currently displayed on product detail pages, and we're continually working to improve Alexa for Shopping to make this information even more accessible for customers" 1

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. Walmart did not provide a comment to media outlets 1

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The findings raise questions about regulatory responsibility as AI assistants increasingly replace traditional search functions 2

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. If consumers rely on AI to decide what products to buy, design choices behind those systems become far more consequential. Decisions about which products are surfaced first, which attributes are emphasized, and which questions receive complete answers could shape purchasing behavior in ways that remains largely invisible to shoppers 2

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. Khan previously sued Amazon during her FTC tenure, accusing it of holding illegal online retail monopolies, a case that remains ongoing 1

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