Amazon and Walmart AI Conceal 'Made in USA' Products

A new study released by Columbia Law School's Center for Law and the Economy reveals that e-commerce giants Amazon and Walmart are utilizing their AI-powered shopping assistants in ways that conceal "Made in USA" products from consumers and permit deceptive origin claims. The report, led by former U.S. Federal Trade Commission (FTC) Chair Lina Khan, highlights that AI tools such as Amazon's Alexa and Walmart's Sparky possess the capability to detect conflicting information regarding a product's true country of origin but fail to flag these discrepancies to shoppers.

Researchers found that the AI assistants could readily identify contradictions within the same product listing, such as a "Made in USA" badge appearing alongside details about imported components or overseas shipping. However, when questioned about why these inconsistencies were not flagged to customers, the AI assistants cited business justifications rather than technical limitations. Walmart's Sparky reportedly suggested that the FTC typically pursues manufacturers, not retailers, for misleading labeling. Amazon's Alexa was even more direct, stating 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."

This practice places American manufacturers at a significant competitive disadvantage and erodes consumer trust, particularly as over 80% of consumers prefer to buy American-made products to support the local economy and jobs. The proliferation of AI in the e-commerce sector raises critical questions about whether these tools are primarily designed to boost commercial interests or to protect consumers. Furthermore, for major retailers like Amazon and Walmart, these findings signal potential regulatory risks and reputational damage.

Under FTC regulations, a product can only be marketed as "Made in USA" if it is "all or virtually all" manufactured in the United States. The FTC had previously sent warning letters to Amazon and Walmart in July 2025, urging them to address deceptive "Made in USA" claims by third-party sellers on their marketplaces. This indicates that regulators have been monitoring the issue and expect greater accountability from retailers. Former FTC Chair Khan emphasized that these findings demonstrate how commercial incentives will shape the deployment of increasingly sophisticated AI technology.

Analysts suggest that this report increases potential legal and reputational risks for large retailers such as Amazon and Walmart. If regulators determine that these companies possessed the technology to detect deceptive listings but chose not to act, it could lead to fines and legal proceedings. Moving forward, policymakers are expected to push for stronger regulations to enhance the accountability of AI-powered shopping assistants. Amazon stated that country-of-origin information is displayed on product pages when available and that they are continually working to improve Alexa's ability to provide this information more accurately. Walmart has not yet issued an official comment.