Amazon, Walmart AI detect 'made in USA' fraud but do not flag it, study says

A new study reveals that Amazon and Walmart's AI shopping assistants can detect false "Made in USA" labels, but the retailers are not using this technology to crack down on the listings due to conflicting business incentives.

Amazon and Walmart AI shopping assistants can often detect when "Made in USA" product labels are false, but the big retailers are not using that technology ‌to crack down on the listings, according to a new study from a think tank led by former Chair of the U.S. Federal Trade Commission Lina Khan.

The study resurfaces questions about AI shopping assistants' mixed incentives, as retailers see the technology as a way to boost spending. Amazon's Alexa for Shopping and ‌Walmart's Sparky shopping assistants are capable of detecting mismatches between explicit "made in USA" claims and contradictory information in product listings, the study's authors ‌wrote.

When the AI bots are queried on why the companies are not doing more to combat the false labeling, the AI-driven chatbots have cited business justifications. When researchers asked Walmart's Sparky why it does not flag suspicious "made in USA" claims, it responded that the FTC typically enforces "made in USA" rules against manufacturers, not retailers. "That's a business calculation, not a legal ⁠justification," Walmart's chatbot ​said, according to the study.

A spokesperson ⁠for Walmart did not immediately comment. "Country-of-origin information, when available, is currently displayed on product detail pages, and we’re continually working to improve Alexa for Shopping’s ability to accurately provide this ⁠information to make it even more accessible for customers,” a spokesperson for Amazon said. Amazon takes action when it finds sellers violating its policies, the company added.

The study is ​the first published by Columbia Law School's Center for Law and the Economy, launched after Khan returned to the university after her ⁠stint with the Federal Trade Commission. "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," Khan said.

FTC rules require products advertised as "made in USA" to be "all or virtually all" made in the United States. The FTC last year urged Walmart and Amazon to crack down on third-party sellers' "made in ⁠USA" claims, citing company policies requiring sellers to provide accurate information. When asked about false "made in USA" claims persisting on the platform, Amazon's Alexa replied, according ⁠to the authors, "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."

Khan sued Amazon when she was at the FTC, accusing it ‌of holding illegal online retail ‌monopolies. The case is ongoing.