Senators ask FTC to probe Amazon and Walmart AI: Made in USA goods hidden

Two US senators from opposite parties asked the Federal Trade Commission on September 17 to open an investigation into how Amazon and Walmart’s AI shopping assistants handle “Made in the USA” claims. Tammy Baldwin, a Wisconsin Democrat, and Rick Scott, a Florida Republican, wrote to FTC Chairman Andrew Ferguson and Commissioner Mark Meador that Amazon’s Alexa for Shopping and Walmart’s Sparky may “obscure and suppress” information about which products are genuinely American-made, and which ones only claim to be. The Wall Street Journal first reported the letter; Reuters, The Hill and PYMNTS followed within hours.

The request rests on a July report from Columbia Law School’s Center for Law and the Economy, the research center directed by former FTC chair Lina Khan. The report, titled “Made in America, Hidden by AI,” found that both assistants can identify products that carry a false Made in USA label, yet neither one flags that to shoppers. Amazon says it does not intentionally withhold origin information. Walmart had not commented by the time the story ran.

For the two largest US retailers, the letter lands in a week that already included an expanded $2.5 billion Amazon Prime settlement, a $20 billion FTC advertising suit against Amazon, and a fast-approaching comment deadline on personalized pricing. It also arrives six months after a presidential executive order told the FTC to treat Made in USA fraud on online marketplaces as a priority. This piece explains what the senators asked for, what the research actually tested, how the companies responded, and what the FTC can realistically do next.

In short

  • Bipartisan letter: Senators Baldwin and Scott asked the FTC on September 17 to investigate Amazon and Walmart for suppressing Made in USA products in their AI assistants and for failing to report fraudulently labeled goods.
  • The evidence: Columbia’s “Made in America, Hidden by AI” report found Alexa for Shopping said it had no access to Made in USA data while producing lists of goods made in China, and that both bots called non-flagging of fraud “a business decision.”
  • Company line: Amazon says country-of-origin data, “when available,” appears on product pages and that it is improving Alexa for Shopping; Walmart gave no immediate comment.
  • Policy backdrop: a March 13, 2026 executive order directs the FTC to prioritize Made in USA enforcement and to consider a rule making a marketplace’s failure to verify origin claims an unfair or deceptive practice.
  • Same-day FTC docket: the commission also expanded Amazon Prime refund payments (cap lifted from $51 to $200) and announced $225 million and $100 million settlements with Amway and FleetCor.

What did the senators ask the FTC to do?

The letter makes two distinct requests, and it is worth separating them because they carry different legal weight. The first is that the FTC investigate whether Amazon and Walmart suppress Made in America products when customers use their AI shopping assistants. The second is that the FTC examine whether the two companies fail to monitor and report fraudulently labeled Made in USA products even though their own AI tools can detect the fraud.

“We all share the goal of strengthening American manufacturing and small businesses,” the senators wrote, according to the text released by Baldwin’s office and carried by WisPolitics. They added that “American manufacturers who adhere to these standards deserve a fair playing field,” and closed with a direct ask: “We strongly urge the Commission to investigate potential suppression of Made in the USA products.” The letter also asks the agency to consider enforcement measures once an investigation is complete, per The Hill.

The letter is addressed to Ferguson and to Commissioner Meador, the chairman and the commissioner who have most visibly driven the agency’s Made in USA agenda since 2025. That matters. A request to a chairman who has already designated July as “Made in the USA Month” and sent warning letters to both companies is not a cold call. It is a request to extend a program the agency already owns.

Why a Democrat and a Republican signed together

Baldwin represents Wisconsin, a state where manufacturing remains one of the largest private employers, and has long pushed Buy American procurement rules. Scott, a former Florida governor, has been among the most vocal Senate Republicans on Chinese imports and origin fraud. The two senators’ framing, that hidden American goods hurt domestic factories and mislead shoppers at the same time, gives the FTC both a competition angle and a consumer-protection angle in one document.

The bipartisan signature also shields the request from being read as a partisan attack on either retailer. Both companies have Republican-friendly and Democrat-friendly constituencies in Congress, and both have spent heavily on their Washington presence. A letter that arrives with one signature from each party is harder to dismiss.

What did the Columbia report actually test?

The Center for Law and the Economy published “Made in America, Hidden by AI” on July 30, 2026, with a subtitle that leaves little doubt about its conclusion: “AI Shopping Chatbots Reveal How Amazon and Walmart Hurt American Manufacturers and Deceive Shoppers.” The center is led by Khan, who chaired the FTC from 2021 to early 2025 and brought the agency’s antitrust case against Amazon. Her involvement gives the research a high profile and, inevitably, an easy target for the companies’ defenders.

The method, as described in coverage by Tom’s Guide and The American Bazaar, was to interrogate the two assistants “the way an engineer would”: ask a question, ask the mirror-image question, then ask the bot to explain any inconsistency. Researchers asked Alexa for Shopping to find American-made furniture, fishing poles and flags, and then asked for the same categories made in China. They also fed both bots product listings that carried a Made in USA badge alongside text mentioning imported components or overseas shipping, and asked whether the listing was truthful.

The report’s five headline findings, as summarized on the center’s own page, are that both retailers have the technical capability to detect and flag Made in USA fraud; that such fraud appears to be common on both platforms; that Amazon blocks answers about Made in USA products while allowing equivalent questions about Made in China products; that both assistants describe inaction as a business decision rather than a technical limit; and that Amazon and Walmart have walked back specific public commitments to document how their AI tools work. That last point is the one most likely to draw regulatory interest, because it goes to disclosure, a subject where the FTC has clear jurisdiction. The site’s earlier analysis of why AI shopping recommendations face a US deception case flagged exactly this gap between what platforms promise about their agents and what the agents do.

The filter test

The most quoted finding concerns filters. When asked to find a Made in USA product, Alexa for Shopping replied that it did not have access to that information, according to the senators’ letter. When asked to show products made in China, it generated a list. When researchers then asked why there is no Made in USA filter, the assistant answered that such a filter would “redirect significant sales away from their largest seller base,” a reference to overseas manufacturers.

The exchange is striking because it is the assistant, not the researchers, supplying the commercial motive. A large language model producing a plausible-sounding rationale is not the same as a documented corporate policy, and the report’s critics will make that point. But the senators quoted the line verbatim in their letter, which means the FTC will now have to decide whether it is worth testing against Amazon’s internal documents.

The fraud-flag test

The second finding is about detection without disclosure. Both Alexa for Shopping and Sparky, when shown a listing whose Made in USA claim contradicted other details on the page, correctly identified the contradiction. Neither one volunteered that information to a shopper who had not asked. “When asked why this fraud is not flagged, both chatbots responded that it is a business decision not to,” the senators wrote.

The American Bazaar reported two further verbatim responses. Sparky reportedly said the “FTC typically pursues manufacturers rather than retailers for false labeling.” Alexa, in a passage that reads like a compliance memo, reportedly said: “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.” Whether those lines reflect anything more than a model predicting text, they are now in the congressional record.

What Khan said

Khan’s public comment on the report framed it as an incentives story rather than a technology story. The findings, she said, show that increasingly sophisticated AI systems are still shaped by the incentives behind them, and that Amazon and Walmart deploy their AI capability selectively, hiding America-made products while mislabeling imported ones. “Business incentives will shape how these advancements get deployed,” she added. “Policymakers and enforcers have a vital role to play to ensure the public doesn’t get the short end of the stick.”

How did Amazon and Walmart respond?

Amazon’s response, given to Reuters and repeated to PYMNTS, was narrow and specific. The company said it does not intentionally withhold origin information and 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.” The phrase “when available” is doing a lot of work: it concedes that many listings do not carry origin data at all, which is the underlying problem the senators describe.

Walmart did not respond to Reuters’ request for comment and, per The Hill, provided no immediate statement after the letter went public. The company has spent 2026 positioning Sparky as the front door to Walmart.com, so a prolonged silence on how the assistant handles origin data is unlikely to hold.

Neither company disputed the specific chatbot transcripts. That is consistent with how large retailers usually respond to LLM-output research: challenge the framing, not the screenshots. It is also consistent with the fact that assistant behavior can change overnight, which means both companies could quietly ship a Made in USA filter well before any FTC process reaches a conclusion.

Why is this a platform-liability question rather than a seller question?

Made in USA fraud is not new. What has changed since mid-2025 is where the FTC places responsibility. For decades the agency pursued the manufacturer or brand that made the false claim. Since July 2025 it has said, in writing, that the marketplace hosting the claim also carries an obligation.

On July 1, 2025, Ferguson designated July as “Made in the USA Month.” On July 8, the agency sent warning letters to four companies (Americana Liberty, Oak Street Manufacturing, Pro Sports Group and USA Big Mountain Paper) and, in a separate step that drew far more attention, letters to Amazon and Walmart identifying third-party sellers on their sites that appeared to be making deceptive US-origin claims. The letters said such claims may violate the FTC Act and the platforms’ own terms of service. “‘Made in the USA’ is not just a slogan,” Ferguson said at the time. “It’s a sign that a product connects us to the workers and businesses that make America great.” The commission’s July 2025 press release remains the clearest public statement of that position.

Law-firm summaries of the Amazon letter quoted the FTC as saying: “As the operator of an online marketplace, you are responsible for ensuring that claims made about products sold through your platform are not false or misleading.” Walmart’s letter reportedly said the company “must take reasonable steps to prevent unqualified Made in USA claims from appearing in product listings on your site.” The senators’ September 17 letter cites these July 2025 letters directly, and asks the obvious follow-up question: if the platforms’ own AI can spot the fraud, what “reasonable steps” have they taken since?

The March 2026 executive order

The second building block is the executive order President Trump signed on March 13, 2026, titled “Ensuring Truthful Advertising of Products Claiming to be Made in America.” According to summaries from Covington, Holland & Knight and Morrison Foerster, the order directs the FTC to prioritize enforcement against false or unsubstantiated US-origin claims and, critically for this story, to consider promulgating a rule that would deem an online marketplace’s failure to establish procedures for verifying country-of-origin claims to be an unfair or deceptive act under the FTC Act.

That rulemaking authority is the lever the senators are really pulling. An investigation into two companies produces, at best, two consent orders. A rule that makes verification procedures mandatory would apply to every marketplace, including Temu, Shein, eBay, Etsy and Target Plus, and would give the agency a civil-penalty hook it does not currently have for platform inaction.

The April 2026 sweep

The FTC has already shown it will follow the order with money. On April 14, 2026, it announced settlements worth a combined $867,743 with three companies over false Made in USA claims: TouchTunes Music Company paid $625,000, which Arnold & Porter describes as the largest monetary relief in a case under the Made in USA Labeling Rule; Americana Liberty, one of the July 2025 warning-letter recipients, paid $167,743; and Oak Street Manufacturing, another warning-letter recipient, paid $75,000.

Two of the three April settlements were with companies the FTC had warned nine months earlier. That pattern, warning letter first and enforcement second, is what makes the senators’ request consequential for Amazon and Walmart. Both retailers received their warning letters in the same July 2025 batch.

Date Action Who it targeted Outcome
July 1, 2025 FTC designates “Made in the USA Month” All advertisers Signal of enforcement priority
July 8, 2025 Warning letters Four sellers plus Amazon and Walmart Platforms told to monitor third-party claims
March 13, 2026 Executive order on Made in America advertising FTC and federal agencies Directs priority enforcement; marketplace verification rule to be considered
April 14, 2026 Enforcement sweep TouchTunes, Americana Liberty, Oak Street $867,743 combined; $625,000 record
July 30, 2026 Columbia report published Amazon Alexa for Shopping, Walmart Sparky Five findings on suppression and fraud detection
September 3, 2026 AAM letter to FTC Amazon, Walmart AI assistants Trade group asks for investigation
September 17, 2026 Baldwin and Scott letter Amazon, Walmart Formal congressional request for investigation

What does the FTC’s Made in USA standard actually require?

The legal test is old and strict. To make an unqualified Made in USA claim, a product must be “all or virtually all” made in the United States. The FTC’s formulation, as quoted by Arnold & Porter, is that “the final assembly or processing of the product occurs in the United States, all significant processing that goes into the product occurs in the United States, and all or virtually all ingredients or components of the product are made and sourced in the United States.” In practice the product should contain no, or only negligible, foreign content.

In 2021 the commission codified that standard for labels in the Made in USA Labeling Rule at 16 CFR Part 323. The rule matters because it converted a decades-old policy statement into a trade regulation rule, which lets the agency seek civil penalties for violations rather than only injunctions. TouchTunes’ $625,000 payment in April was the first large demonstration of that penalty power.

A qualified claim, such as “Assembled in USA” or “Made in USA with imported components,” is permitted as long as it is truthful and not misleading. Separately, US customs law has required imported goods to be marked with their country of origin since the 1930s, under 19 U.S.C. 1304. The gap the senators describe sits between these two regimes: the physical product may be correctly marked “Made in China” on its underside while the online listing, the badge and now the AI assistant say something else.

Regime Who enforces What it requires Where it bites for e-commerce
Unqualified Made in USA claim FTC (FTC Act Section 5, 16 CFR 323) “All or virtually all” domestic content Listing badges, titles, AI assistant answers
Qualified US-origin claim FTC Truthful, non-misleading qualifier “Assembled in USA” copy in bullets and images
Customs marking US Customs and Border Protection (19 U.S.C. 1304) Imported articles marked with foreign origin Physical product and packaging, not the web page
Marketplace verification (proposed) FTC, per March 2026 executive order Procedures to verify origin claims Would reach the platform, not only the seller

What can the FTC realistically do next?

A congressional letter does not open an investigation. What it does is raise the cost of doing nothing. Ferguson’s FTC has three tools available, and the senators’ two-part request maps onto all of them.

Route one: a Section 6(b) study

The commission can issue orders under Section 6(b) of the FTC Act compelling companies to answer detailed questions without any allegation of wrongdoing. A 6(b) study of how AI shopping assistants source, rank and disclose country-of-origin data would let the agency obtain Amazon’s and Walmart’s internal design documents, the very material that would confirm or refute the “largest seller base” rationale the assistant offered. The agency used this tool for its surveillance pricing study in 2024 and has since built that work into the personalized pricing policy statement that shopappy covered in its analysis of why the FTC personalized pricing standard likely becomes the US rule by Q1 2027. A 6(b) order on origin data would follow the same playbook.

Route two: enforcement under Section 5

The more aggressive path is a civil investigative demand followed, if warranted, by a complaint alleging that the platforms’ conduct is deceptive or unfair. The theory would be that a retailer which can detect a false Made in USA label and chooses not to act, while telling shoppers it displays origin data “when available,” is engaged in a deceptive omission. That is a harder case than the sweep against small manufacturers, and it would take years. But the July 2025 letters already put both companies on notice, which is the usual precondition for treating a continuing practice as knowing.

Route three: the marketplace rule

The executive order’s rulemaking directive is the path with the widest consequences. A trade regulation rule under Section 18 of the FTC Act requires an advance notice, a notice of proposed rulemaking, an informal hearing and a final rule, a process that took the agency more than a year and a half for its click-to-cancel rule. If the commission started this autumn, the earliest realistic effective date would be late 2027 or 2028. The senators’ letter, and the trade-group letter that preceded it, give the agency the record it needs to justify starting.

What does this mean for sellers and brands on both marketplaces?

For third-party sellers, the practical exposure has not changed since April: an unqualified Made in USA badge on a product with meaningful foreign content is a penalty risk, and the agency has shown it will go after companies with as little as $75,000 to pay. What the September 17 letter changes is the platforms’ incentive to police that badge. If Amazon and Walmart move to automated verification, sellers should expect listing suppressions, badge removals and requests for documentation of domestic content, most likely before the holiday quarter rather than after it.

For brands that genuinely manufacture in the United States, the report’s central complaint is the one that matters commercially: the assistant cannot find them. The site’s guide to preparing a store for AI shopping agents makes the point that agents rank on structured fields, not on marketing copy. A Made in USA claim buried in a product image or an A+ content module is invisible to an assistant that reads attribute tables. The near-term fix for a domestic manufacturer is to populate the country-of-origin attribute on every listing, in every channel, and to hold documentation that would satisfy the “all or virtually all” test if the platform, or the FTC, asks for it.

There is also a pricing dimension. Section 301 tariffs of 10% to 12.5% on imports from roughly 60 trading partners have been in force since late July, and the Section 232 and Section 338 measures on Canada, drones, pharmaceuticals and furniture have widened since. A shopper who asks an assistant for the cheapest option will increasingly be shown a domestic product on price alone. If the assistant cannot say where that product was made, the retailer forfeits a selling point the tariff regime has handed it.

How does this fit the wider FTC docket on Amazon?

The Made in USA letter is the fourth FTC-related development involving Amazon in less than three weeks, and the pattern is worth reading as a whole rather than as isolated events.

On September 1, the FTC sued Amazon over what it alleges are hidden surcharges in its advertising auctions, a case the site covered under the headline FTC sues Amazon over hidden ad auction surcharges: $20bn at stake. Florida’s attorney general joined that case on September 17, per The Business Journals. On September 6, the FTC extended its personalized pricing comment deadline to September 25. And on September 17, hours after the senators’ letter went public, the commission announced that Amazon had agreed to accelerate and expand consumer payments under its $2.5 billion Prime settlement from 2025.

The Prime numbers are large. The settlement comprises up to $1.5 billion in consumer redress and a $1 billion civil penalty, according to the FTC’s release. More than $845 million has been paid out so far. Under the revised order, the maximum individual payment rises from $51 to $200, eligible consumers receive an additional automatic $149, and from October 1, 2026, eligibility widens from consumers who used fewer than 10 Prime benefits in a year to those who used between 11 and 20. “The revised order will ensure more consumers who were harmed by Amazon’s deceptive enrollment and cancellation practices benefit from the FTC’s historic settlement,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection.

The same day the commission announced a $225 million settlement with Amway over multilevel marketing practices and a $100 million settlement with FleetCor over unauthorized fees charged to small businesses. An agency that closes three nine-figure matters in a single day and receives a bipartisan letter about the country’s two largest retailers is not short of momentum.

Date (2026) FTC matter Company Amount or ask
September 1 Ad auction surcharge lawsuit Amazon Up to $20 billion alleged at stake; Florida joined September 17
September 6 Personalized pricing comment extension All retailers Comments due September 25
September 15 Price transparency FAQs Auto dealers Guidance only
September 16 Beretta and Ruger stock deal Firearms makers Anticompetitive arrangement blocked
September 17 Prime settlement payments expanded Amazon $2.5 billion total; cap $51 to $200; $149 automatic top-up
September 17 Multilevel marketing action Amway $225 million
September 17 Unauthorized fees FleetCor $100 million
September 17 Baldwin and Scott letter Amazon, Walmart Investigation requested

Is there real consumer demand behind the Made in USA question?

The senators were not the first to ask. On September 3, the Alliance for American Manufacturing, an industry and union coalition led by Scott Paul, sent its own letter urging the FTC to investigate whether AI shopping assistants steer consumers toward imports while obscuring American-made alternatives. “Consumers should not have to outsmart an algorithm to find American-made products,” Paul said.

The AAM letter cited polling that gives the FTC a consumer-harm narrative to work with. According to the group, 83% of Americans say they would buy more US-made goods if they were more readily available, 82% would choose an American-made product over a similar import, 77% support requiring online retailers to display country-of-origin labels the way physical stores must, and 35% report difficulty finding origin information when shopping online. The polling is the group’s own and should be read as advocacy research, but the direction is consistent with what the FTC found when it wrote the 2021 rule.

The commercial reality is more mixed. Made in USA products typically carry a price premium, and the same tariff regime that makes imports dearer also raises input costs for domestic factories that buy foreign components. But the political demand is unambiguous. An FTC chairman appointed by a president who signed a Made in America executive order, receiving a letter signed by a Republican and a Democrat, citing research from the previous Democratic chair, is facing an unusually complete coalition.

What should retailers and sellers watch next?

The next four weeks contain several fixed dates that will show whether the letter has traction.

  1. September 25: comments close on the FTC’s personalized pricing policy statement. Any response that references AI assistants and origin disclosure will signal that the agency is thinking about the two issues together.
  2. October 1: the expanded Amazon Prime refund eligibility takes effect. It is unrelated to origin claims but keeps the Prime order, and Amazon’s compliance posture, in the news.
  3. October 6 to 7: Amazon’s Prime Big Deal Days. Watch whether Alexa for Shopping or Rufus gains a visible Made in USA filter before the event; a quiet product change would be the cheapest way for Amazon to defuse the letter.
  4. Mid-October: the FTC’s customary response window to congressional correspondence. A public reply from Ferguson confirming an inquiry, or a 6(b) order, would move this from letter to matter.
  5. Holiday quarter: Walmart’s Sparky roadmap. The company has been silent so far; its next investor communication is the first place a policy change would surface.

For sellers, the actionable work does not depend on any of those dates. Origin data belongs in the structured attribute, not in the image, and the documentation behind an unqualified claim needs to exist before a platform or the FTC asks for it. The site’s breakdown of the product feed fields that decide whether an AI agent includes a listing covers where that attribute sits in each channel’s schema.

The larger question the letter raises is one the FTC has avoided until now: whether a marketplace that builds an assistant capable of detecting fraud, and then chooses not to surface it, has made a design decision that the FTC Act reaches. Baldwin and Scott have asked the agency to answer it. The agency has the tools, the executive order and, as of this week, the momentum. What it does not yet have is a public timetable.

Frequently asked questions

Who sent the letter to the FTC about Amazon and Walmart?

Senators Tammy Baldwin, a Democrat from Wisconsin, and Rick Scott, a Republican from Florida, sent the letter on September 17, 2026. It is addressed to FTC Chairman Andrew Ferguson and Commissioner Mark Meador. The Wall Street Journal first reported it; Reuters, The Hill and PYMNTS confirmed the contents.

What exactly do the senators want the FTC to investigate?

Two things: whether Amazon’s Alexa for Shopping and Walmart’s Sparky suppress Made in USA products when shoppers ask for them, and whether the two companies fail to monitor and report fraudulently labeled Made in USA goods even though their AI tools can detect the fraud. They also asked the agency to consider enforcement once an investigation is complete.

What is the “Made in America, Hidden by AI” report?

It is a July 30, 2026 report from Columbia Law School’s Center for Law and the Economy, which is directed by former FTC chair Lina Khan. Researchers queried both retailers’ AI assistants and found that Alexa for Shopping said it lacked access to Made in USA data while producing lists of goods made in China, and that both assistants could identify false Made in USA labels but described not flagging them as a business decision.

How did Amazon respond?

Amazon told Reuters it does not intentionally withhold origin information and that “country-of-origin information, when available, is currently displayed on product detail pages,” adding that it is working to make that data more accessible in Alexa for Shopping. Walmart did not comment.

What does “Made in USA” legally require?

An unqualified Made in USA claim requires that a product be “all or virtually all” made in the United States: final assembly in the US, all significant processing in the US, and negligible foreign content. The FTC codified the standard in the 2021 Made in USA Labeling Rule (16 CFR Part 323), which allows civil penalties.

Has the FTC acted against Amazon or Walmart on this before?

Not with penalties. In July 2025 the FTC sent both companies warning letters identifying third-party sellers on their sites that appeared to make deceptive US-origin claims and told the platforms they are responsible for monitoring such claims. Two of the small companies warned in the same batch settled with the FTC in April 2026.

What does the March 2026 executive order do?

Signed March 13, 2026, the order “Ensuring Truthful Advertising of Products Claiming to be Made in America” directs the FTC to prioritize enforcement of US-origin claims and to consider a rule that would treat a marketplace’s failure to establish origin-verification procedures as an unfair or deceptive practice. That rulemaking, if started, would apply to every online marketplace, not only Amazon and Walmart.

Could the FTC force Amazon and Walmart to add a Made in USA filter?

Not directly through this letter. The realistic routes are a Section 6(b) study to obtain internal documents, a Section 5 deception case built on the July 2025 warning letters, or a trade regulation rule under the executive order. Any of those would take months to years. A voluntary product change by either retailer before the holiday quarter is the faster and more likely outcome.

What should third-party sellers do now?

Remove any unqualified Made in USA badge from listings with meaningful foreign content, populate the structured country-of-origin attribute on every listing so AI assistants can read it, and keep documentation that would satisfy the “all or virtually all” test. Expect both platforms to tighten automated verification before the holidays regardless of what the FTC decides.