Amazon and Walmart AI can detect false 'Made in USA' labels but don't flag them, study finds

A Columbia Law School study led by former FTC Chair Lina Khan reveals that Amazon's Alexa and Walmart's Sparky AI assistants can detect false "Made in USA" labels but are not programmed to flag them. When queried, the AI bots cited business justifications for the inaction, with Alexa noting it remains easier to do nothing until Amazon faces direct financial or regulatory costs. The findings highlight how commercial incentives shape AI deployment despite FTC rules requiring products labeled "Made in USA" to be virtually entirely domestic.

False Made in USA labels

• ▪A study by Columbia Law School's Center for Law and the Economy found that Amazon and Walmart AI shopping assistants can detect false "Made in USA" labels but the retailers do not use the technology to flag them.
• ▪The Federal Trade Commission in 2025 urged Walmart and Amazon to crack down on third-party sellers making false "Made in USA" claims on their platforms.

AI shopping assistant capabilities

• ▪When asked why Walmart does not flag suspicious "Made in USA" claims, Walmart's Sparky chatbot responded that the Federal Trade Commission typically enforces these rules against manufacturers rather than retailers.
• ▪Amazon's Alexa for Shopping and Walmart's Sparky shopping assistants can identify discrepancies between explicit "Made in USA" claims and contradictory information in product listings.

Retailer business incentives

• ▪Retailers view AI shopping assistants as tools to boost consumer spending, creating mixed incentives regarding whether to deploy the technology to police product listings.
• ▪When asked about false "Made in USA" claims persisting on the platform, Amazon's Alexa chatbot stated that it remains easier to do nothing until the harm creates a financial, regulatory, or reputational cost for Amazon.

FTC labeling enforcement rules

• ▪Federal Trade Commission rules require products advertised as "Made in USA" to be "all or virtually all" made in the United States.
• ▪Lina Khan, the former Chair of the Federal Trade Commission, sued Amazon during her tenure, accusing the company of holding illegal online retail monopolies in an ongoing case.

Lina Khan Columbia study

• ▪Lina Khan stated that business incentives shape how AI advancements get deployed, and policymakers must ensure the public is protected.
• ▪The study on AI shopping assistants is the first published by Columbia Law School's Center for Law and the Economy, which was launched after Lina Khan returned to the university.

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