You can often resolve this problem by doing the following ... Please note that this will remove any and all files on the USB drive.
- Connect the drive to your computer
- Right Click Start > Run to open a Run window
- In the Open: field type diskpart then click OK
- Allow any prompt
- A diskpart window will open
- Type list disk then hit return to list the drives connected to your computer
- From the list, note the number associated with your USB drive
- type select disk plus the number of your USB drive then hit return ..... for example select disk 3
- Type clean then hit return to remove all data on the drive
- Type create partition primary then hit return and diskpart will create a partition
- Wait for it to finish.
- Exit the diskpart window.
Now re-format your USB drive,and you should find that it has regained its true capacit