Congressional Inquiry into Retail AI Practices
A bipartisan group of U.S. senators has formally requested that the Federal Trade Commission (FTC) launch an investigation into the AI-powered shopping assistants employed by Walmart and Amazon. Sens. Tammy Baldwin (D-Wisc.) and Rick Scott (R-Fla.) issued the call following a July report from Columbia University researchers, which alleged that these retail giants are utilizing artificial intelligence to systematically obscure products made in the United States while favoring imports.
The senators argue that the current algorithmic deployment on these massive marketplaces risks misleading consumers and undermining domestic manufacturers. “If Americans want to buy products made in America, Amazon and Walmart should be helping them, not giving away their business to foreign knockoffs,” Sen. Baldwin stated in comments reported by the Wall Street Journal.
The Columbia University Findings
The research, conducted by a policy center co-founded by former FTC Chair Lina Khan, provides a detailed look at how these retail chatbots handle product origin information. The study suggests that the retail bots are not merely passive search tools but are programmed in a way that prioritizes specific business outcomes over transparency. Researchers documented instances where Walmart’s chatbot acknowledged that while identifying “Made in USA” fraud is technically possible, the company has limited its proactive compliance systems due to “a business calculation, not a legal justification.”
This “business calculation” is at the heart of the senators’ concern. The letter sent to the FTC by Sens. Baldwin and Scott emphasizes that as two of the world’s largest retail companies, both Amazon and Walmart have an obligation to maintain federal standards. They argue that the promotion of overseas and potentially fraudulent sellers through AI interfaces creates an uneven playing field for domestic suppliers who adhere strictly to labeling standards.
Legislative Context and Next Steps
The request for an investigation aligns with broader legislative efforts to increase transparency in e-commerce. Sen. Baldwin is the primary sponsor of the Country of Origin Labeling (COOL) Online Act, which aims to mandate that all goods sold online include clear country-of-origin labeling, mirroring requirements currently in place for brick-and-mortar retail locations. Sen. Scott is a co-sponsor of the bill, which has also received an endorsement from the Alliance for American Manufacturing (AAM).
The FTC now faces pressure to determine whether these AI tools constitute deceptive trade practices under existing consumer protection laws. If the commission moves forward, the investigation could force both retailers to overhaul how their algorithms handle product origin data and potentially lead to new regulatory frameworks for AI in retail settings.