Amazon, Walmart Face FTC Probe Call Over AI Chatbots And ‘Made In USA’ Claims — AMZN, WMT Stocks In Focus

Two senators are asking the FTC to investigate whether Alexa for Shopping and Walmart’s Sparky disadvantage U.S.-made products and fail to flag misleading labels.

• Senators Tammy Baldwin and Rick Scott cited a study led by former FTC Chair Lina Khan in their letter to the FTC.
• The study found the chatbots could suppress information about U.S.-origin products while providing details on goods made in countries such as China.
• Researchers said the AI assistants can identify potentially false “Made in USA” claims, but retailers are not using that capability to police listings.

Amazon.com Inc. (AMZN) and Walmart Inc. (WMT) are facing calls for a Federal Trade Commission (FTC) investigation over allegations that their AI shopping assistants may suppress information about U.S.-made products and fail to flag potentially fraudulent “Made in USA” claims.

At the time of writing on Thursday afternoon, AMZN stock was trading 2.2% higher, while WMT shares were down nearly 1%.

Senators Ask FTC To Investigate

Senators Tammy Baldwin and Rick Scott called on the FTC to investigate Amazon’s Alexa for Shopping and Walmart’s Sparky AI shopping assistant in a letter to the agency.

Baldwin and Scott pointed to research from a think tank led by former FTC Chair Lina Khan. The study found differences in how the two shopping assistants handled information about product origins, including less information on U.S.-made goods compared with products from countries such as China. The senators said this could hurt efforts to support domestic manufacturers and leave shoppers with misleading information.

According to the letter, Alexa told researchers that adding a “Made in USA” filter would “redirect significant sales away from their largest seller base,” referring to overseas manufacturers.

The study also found that AI shopping assistants can often identify potentially false “Made in USA” labels, but major retailers are not using that capability to crack down on such listings.

Amazon Pushes Back

Amazon rejected the allegation that it intentionally withholds country-of-origin information from customers.

“The suggestion that we intentionally withhold country-of-origin information from customers is fundamentally wrong,” an Amazon spokesperson told Reuters.

Amazon added that Alexa for Shopping is still being improved and currently directs users to product detail pages when they ask where a product was made, which the company said helps ensure accuracy.

Walmart’s Sparky Draws Scrutiny

The study also examined Walmart’s Sparky AI assistant. When researchers asked why it did not flag suspicious “Made in USA” claims, the chatbot cited limited FTC enforcement against retailers and described the issue as a business decision.

The senators urged the FTC to consider additional enforcement measures following what they called a strong investigation.

AMZN, WMT: Stocktwits Retail Sentiment

Stocktwits retail sentiment for both AMZN and WMT was ‘bearish’ at the time of writing on Wednesday. Message volume was ‘normal’ for AMZN and ‘low’ for WMT.

AMZN shares have gained more than 8% year-to-date, while WMT stock has declined nearly 5% over the same period.

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