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UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

UNITED STATES OF AMERICA, 

Plaintiff,

v.

iSPRING WATER SYSTEMS, LLC,

a limited liability company,

ZHUANGYONG CHEN, a/k/a John Chen,

individually and as an officer of 

iSPRING WATER SYSTEMS, LLC,

and

PEARL CAI, a/k/a Yunzhu Cai, 

individually and as an officer of 

iSPRING WATER SYSTEMS, LLC,

Defendants. 

Case No. ____________

COMPLAINT FOR CIVIL 

PENALTIES, PERMANENT 

INJUNCTION, AND OTHER 

EQUITABLE RELIEF 

Plaintiff, the United States of America, acting upon notification and on 

behalf of the Federal Trade Commission (“FTC” or “Commission”), for its 

Complaint alleges that:

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1. Plaintiff brings this action against Defendants iSpring Water Systems, 

LLC (“iSpring” or “Corporate Defendant”); Zhuangyong Chen, a/k/a John Chen

(“Chen”); and Pearl Cai, a/k/a Yunzhu Cai (“Cai”) (collectively, “Defendants”) 

under Sections 5(l) and 16(a)(1), of the Federal Trade Commission Act (“FTC 

Act”), 15 U.S.C. §§ 45(l) and 56(a)(1), to obtain civil penalties, an injunction, and 

other equitable relief for violations of an order previously issued by the 

Commission. See Exhibit A, In re iSpring Water Systems, LLC, 2017 FTC LEXIS

64 (2017) (Decision and Order, FTC Docket No. C-4611) (“Commission Order”).

2. The Commission Order prohibits Corporate Defendant, and Corporate 

Defendant’s officers, agents, employees, and attorneys, and all other persons in 

active concert or participation with any of them, who receive actual notice of the 

Order, from representing that products or services are of United States origin

unless: (a) 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; or (b) a clear and conspicuous qualification 

appears immediately adjacent to the representation that accurately conveys the 

extent to which the product contains foreign parts, ingredients, and/or processing. 

The Commission Order also prohibits Corporate Defendant, and Corporate 

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Defendant’s officers, agents, employees, and attorneys, and all other persons in 

active concert or participation with any of them, from making any unsubstantiated 

claim regarding a product or service’s country of origin.

3. However, in numerous instances, Corporate Defendant and its 

officers, Chen and Cai, made false, deceptive, or unsubstantiated U.S.-origin 

claims for imported products in violation of these Commission Order provisions.

JURISDICTION AND VENUE

4. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 

1331, 1337(a), 1345, and 1355, and 15 U.S.C. §§ 45(l) and 56(a)(1). 

5. Venue in this District is proper under 28 U.S.C. §§ 1391(b)(2), (c)(2), 

and 1395(a).

DEFENDANTS

6. iSpring Water Systems, LLC, also doing business as 123filter.com, is 

a Georgia limited liability company with its principal office or place of business at 

3020 Trotters Parkway, Alpharetta, GA 30004. iSpring has engaged in the 

promotion or offering for sale of water filtration systems and parts to consumers 

internationally, throughout the United States, and in this District. iSpring

advertises and sells its products primarily online, through its own website, 

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123filter.com, and through third-party websites, including, but not limited to, 

amazon.com, overstock.com, sears.com, and homedepot.com.

7. Zhuangyong Chen, a/k/a John Chen, is the owner and an officer of 

iSpring Water Systems, LLC. At all times material to this Complaint, acting alone 

or in concert with others, he has formulated, directed, controlled, had the authority 

to control, or participated in the acts and practices of the Corporate Defendant, 

including the acts and practices set forth in this Complaint. Defendant Chen 

resides in this District and, in connection with the matters alleged herein, transacts 

or has transacted business in this District and throughout the United States. 

8. Pearl Cai, a/k/a Yunzhu Cai, is the Vice President of iSpring Water 

Systems, LLC. At all times material to this Complaint, acting alone or in concert 

with others, she has formulated, directed, controlled, had the authority to control, 

or participated in the acts and practices of the Corporate Defendant, including the 

acts and practices set forth in this Complaint. Defendant Cai resides in this District 

and, in connection with the matters alleged herein, transacts or has transacted 

business in this District and throughout the United States.

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COMMERCE

9. At all times material to this Complaint, Defendants maintained a 

substantial course of trade in or affecting commerce, as “commerce” is defined in 

Section 4 of the FTC Act, 15 U.S.C. § 44.

THE COMMISSION ORDER

10. In a Commission proceeding bearing Docket No. C-4611, the 

Commission charged that Corporate Defendant engaged in deceptive acts or 

practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). 

Specifically, the Commission charged that iSpring represented that its products, 

including, but not limited to, water filtration systems and parts, were all or virtually 

all made in the United States, even though, in many instances, iSpring’s products 

were wholly imported. In other instances, iSpring sourced significant inputs to its 

products from overseas.

11. The parties agreed to settle, and the Commission issued the 

Commission Order. The Commission Order was served on iSpring, became final 

in April 2017, and remains in effect.

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12. Under the Commission Order, Part I states: 

I.

PROHIBITED MISREPRESENTATIONS

IT IS ORDERED that [iSpring], and [iSpring]’s officers, agents, 

employees, and attorneys, and all other persons in active concert or participation 

with any of them, who receive actual notice of this Order, whether acting directly 

or indirectly, in connection with the manufacturing, labeling, advertising, 

promotion, offering for sale, sale, or distribution of any water filtration system or 

associated parts and accessories, or any other product or service, must not make 

any representation, expressly or by implication, that a product or service is Made in 

the United States unless:

A. 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; or 

B. A Clear and Conspicuous qualification appears immediately adjacent to the 

representation that accurately conveys the extent to which the product 

contains foreign parts, ingredients, and/or processing.

 

See Commission Order, Part I. 

13. The Commission Order defines “Made in USA” to mean “any 

representation, express or implied, that a product or service, or a specified 

component thereof, is of U.S.-origin, including, but not limited to, a representation 

that such product or service is “made,” “manufactured,” “built,” or “produced” in 

the United States, or any other U.S.-origin claim.”

See Commission Order, Definition B.

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14. The Commission Order defines “Clear(ly) and Conspicuous(ly)” to 

mean: 

[T]hat a required disclosure is difficult to miss (i.e., easily noticeable) and easily 

understandable by ordinary consumers, including in all of the following ways:

a. In any communication that is solely visual or solely audible, the 

disclosure must be made through the same means through which the 

communication is presented. In any communication made through both 

visual and audible means, such as a television advertisement, the 

disclosure must be presented simultaneously in both the visual and 

audible portions of the communication even if the representation 

requiring the disclosure (“triggering representation”) is made through 

only one means.

b. A visual disclosure, by its size, contrast, location, the length of time it 

appears, and other characteristics, must stand out from any 

accompanying text or other visual elements so that it is easily noticed, 

read, and understood.

c. An audible disclosure, including by telephone or streaming video, must 

be delivered in a volume, speed, and cadence sufficient for ordinary 

consumers to easily hear and understand it.

d. In any communication using an interactive electronic medium, such as 

the Internet or software, the disclosure must be unavoidable.

e. On a product label, the disclosure must be presented on the principal 

display panel.

f. The disclosure must use diction and syntax understandable to ordinary 

consumers and must appear in each language in which the triggering 

representation appears.

g. The disclosure must comply with these requirements in each medium 

through which it is received, including all electronic devices and face-toface communications.

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h. The disclosure must not be contradicted or mitigated by, or inconsistent 

with, anything else in the communication.

i. When the representation or sales practice targets a specific audience, such 

as children, the elderly, or the terminally ill, “ordinary consumers” 

includes reasonable members of that group.

See Commission Order, Definition A.

DEFENDANTS’ CONDUCT

15. At all times relevant to this Complaint, Defendants engaged in the 

promotion or offering for sale of water filtration systems and parts as iSpring 

Water Filtration Systems, LLC. 

16. At all times relevant to this Complaint, Chen and Cai served as 

officers of the Corporate Defendant and formulated, directed, controlled, had the 

authority to control, or participated in the acts and practices of the Corporate 

Defendant.

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Defendants’ Notice of the Commission Order

17. On December 15, 2016, Cai signed the Commission Order on behalf 

of iSpring as iSpring’s Vice President. On April 25, 2017, Cai acknowledged 

receipt of the final Commission Order on iSpring’s behalf.

18. Prior to signing the Commission Order, Cai confirmed the terms of 

the Commission Order with iSpring’s owner, Chen. During the course of the 

FTC’s compliance investigation, Chen was copied on the majority of emails 

discussing iSpring’s sales and alleged Commission Order violations.

Defendants’ False and Deceptive “Made in USA” Claims

19. On or about March 10, 2018, Defendants began to disseminate or 

cause to be disseminated advertisements and promotional materials for its water 

filtration products, including, but not necessarily limited to, the attached Exhibits 

B-D. These materials contain the following statements and images, among others:

A. “Designed and crafted in USA” (Exhibit B); 

B. (Exhibit C); 

C. (Exhibit D). 

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20. Defendants’ representations, as depicted in Exhibits B-D, are “Made 

in USA” claims under the terms of the Commission Order because they are 

“express or implied [representations] that a product or service, or a specified 

component thereof, is of U.S.-origin.” See Commission Order, Definition B.

21. In numerous instances, the water filtration systems advertised in the 

promotional materials shown in Exhibits B-D were wholly imported, and 

Defendants did not rely upon a reasonable basis for their “Made in USA” claims.

VIOLATION OF COMMISSION ORDER

22. In numerous instances, in connection with the promotion or offering 

for sale of their products, Defendants, directly or indirectly, made “Made in USA” 

claims for its products, as that term is defined in Definition B of the Commission 

Order. 

23. Part I of the Commisson Order states that the Corporate Defendant 

and its officers and employees with actual notice of the Commission Order should 

not make “Made in USA” claims unless: “[t]he 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; or [a] Clear 

and Conspicuous qualification appears immediately adjacent to the representation 

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that accurately conveys the extent to which the product contains foreign parts, 

ingredients, and/or processing.” Commission Order Part I.

24. In truth and in fact, in numerous instances, Defendants made “Made 

in USA” claims for wholly imported products. 

25. Therefore, the representations described in Paragraph 19 constitute 

misrepresentations in violation of Part I of the Commission Order.

COURT’S POWER TO GRANT RELIEF 

26. Each representation Defendants have made in violation of the 

Commission Order constitutes a separate violation for which Plaintiff may seek a 

civil penalty pursuant to Section 5(l) of the FTC Act, 15 U.S.C. § 45(l). 

27. Section 5(l) of the FTC Act, 15 U.S.C. § 45(l), as modified by Section 

4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. §

2461, and Section 1.98(c) of the FTC’s Rules of Practice, 16 C.F.R. § 1.98(c) (Feb. 

14, 2019), directs that a defendant who violates an order of the Commission after it 

has become final, and while such order is in effect, “shall forfeit and pay to the 

United States a civil penalty of not more than [$42,530] for each violation.” 

28. Section 5(l) of the FTC Act, 15 U.S.C. § 45(l), also authorizes this 

Court to grant an “injunction and such other and further equitable relief” as it may 

deem appropriate in the enforcement of the Commission Order. 

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PRAYER FOR RELIEF

29. WHEREFORE, Plaintiff requests this Court, pursuant to 15 U.S.C. 

§45(l), and pursuant to the Court’s own equitable powers: 

A. Enter judgment against Defendants and in favor of Plaintiff for 

violating the Commission Order as alleged in this Complaint;

B. Award Plaintiff monetary civil penalties from Defendants for 

each violation of the Commission Order;

C. Enter an injunction to prevent future violations by Defendants 

of the current Commission Order, or as it is subsequently 

modified by operation of law; 

D. Award Plaintiff the costs of bringing the action, as well as such 

other and further relief as the Court may determine to be just 

and proper.

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DATED: April 10, 2019

LOCAL COUNSEL:

BYUNG J. PAK

United States Attorney

 

AKASH DESAI

Assistant U.S. Attorney

Georgia Bar No. 338124 

600 U.S. Courthouse 

75 Ted Turner Drive SW

Atlanta, Georgia 30303

Telephone: 404-581-6364

Facsimile: 404-581-6181

FOR THE COMMISSION:

JAMES A. KOHM

Associate Director for Enforcement

LAURA KOSS

Assistant Director for Enforcement

/s/ Julia S. Ensor

JULIA SOLOMON ENSOR

Attorney

Federal Trade Commission

Division of Enforcement

600 Pennsylvania Avenue, NW,

Mail Stop CC-9528

Washington, DC 20580

Tel: 202-326-2377

Fax: 202-326-3197

Email: jensor@ftc.gov

FOR THE PLAINTIFF

UNITED STATES OF AMERICA:

JOSEPH H. HUNT

Assistant Attorney General

Civil Division

JAMES M. BURNHAM

Deputy Assistant Attorney General

GUSTAV W. EYLER

Acting Director

/s/ Kendrack D. Lewis 

KENDRACK D. LEWIS

Trial Attorney

Consumer Protection Branch

U.S. Department of Justice

P.O. Box 386

Washington, DC 20044

Tel: 202-353-3881

Email: kendrack.lewis@usdoj.gov

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