According to Wikipedia, the Iron Cross was an old Prussian military award that Hitler restored. It was awarded for bravery in battle. The 2nd class ones, which is what OP was asking about, were very proliferate. According to wikipedia, like 4 million of them were distributed, compared to only 300,000 of the first class version of the medal. So, they have probably been retained in villain's costumes because they were a pretty distinctive but common feature of Nazi uniforms.