UNITED STATES OF AMERICA

Federal Trade Commission

WASHINGTON, D.C. 20580

Office of Commissioner

Rohit Chopra

STATEMENT OF 

COMMISSIONER ROHIT CHOPRA 

In the Matter of Sandpiper/PiperGear USA 

April 17, 2019 

Law enforcement actions without consequences harm honest businesses forced to compete with 

those who don’t play by the rules. With our economy experiencing a rise in counterfeit goods 

from overseas that rely on fake branding and are sold through e-commerce marketplaces, more 

and more law-abiding firms are feeling the pain of lost sales. When there are few consequences

for breaking the law, this represents a wrongful transfer of wealth from the law-abiding to the 

law-breaking. 

Prominent American companies fight hard to protect their brands, but the job of protecting the 

Made in USA brand falls to the Federal Trade Commission. The no-money, no-fault resolution 

reached in this case shows that the Commission needs to make significant changes to its 

approach in protecting and defending the integrity of the Made in USA brand. The FTC should 

activate legal switches granted by Congress decades ago that will allow us to seek substantial

fines against companies that abuse and cheapen the Made in USA brand. 

Sandpiper/PiperGear USA

In its investigation, Commission staff uncovered evidence that Sandpiper/PiperGear USA 

engaged in egregious Made in USA fraud. Sandpiper imported the vast majority of its militarythemed merchandise from China and Mexico, but boasted in its promotional materials about its 

“U.S. manufacturing” while inserting false U.S.-made labels in its products. Using this 

fraudulent labeling, Sandpiper sold thousands of items on American military bases to American 

service members.

In September 2018, the Commission put forth a no-money, no-fault settlement proposal for 

public comment. Notably, the public comments were unanimously opposed to the proposed 

settlement. The comments also provided further evidence of potential harm to competitors. For 

example, the Commission received a comment on behalf of a Sandpiper competitor1 that 

believed it lost out on a valuable Army and Air Force exchange listing based on Sandpiper’s 

 

1 Smith, Gambrell & Russell, LLP on behalf of Advantus, Corp. (Comment #5) at 3–4,

https://www.ftc.gov/system/files/documents/public_comments/2018/10/00005-155955.pdf. 
2

deception.2 In addition, a submission from Consumer Reports highlighted key flaws in the 

argument that the Commission cannot pursue consequences for Sandpiper’s violations.

3

In spite of this feedback from the public, the majority have voted to finalize a resolution that 

essentially lets Made in USA fraudsters get off scot-free. For reasons I have detailed here and in 

my previous statement on the proposed settlement, I respectfully disagree.

Turning on the Penalty Switch

While the Commission currently has the authority to seek some relief4 from companies that 

violate the FTC’s Made in USA standard, it would be far more effective to levy stiff civil 

penalties against flagrant violators. 

Shortly after the North American Free Trade Agreement (NAFTA) came into force in 1994, 

Congress authorized the FTC to codify rules that would trigger civil penalties for violators of the 

Made in USA standard.5 However, the Commission never turned on this penalty switch. By 

restating longstanding Commission policy, after notice and public comment, the Commission 

could switch on financial penalties to deter and punish flagrant Made in USA fraud. See

Attachment: Activating Civil Penalties for Made in USA Fraud. 

Separate and apart from this 1994 authority, there are additional ways that the Commission could

turn on penalties on a case-by-case basis. First, Section 5(m)(1)(B) of the FTC Act allows the 

Commission to seek penalties from companies that knowingly engage in an act or practice that 

the FTC has declared to be unfair or deceptive in a final order (other than a consent order), even 

if those companies were not the target of that original order. The Commission has used this 

authority in the past to protect the integrity of bamboo labeling, but it remains unused to protect 

Made in USA claims. 

Second, as I noted in the Commission’s SoFi matter,6 we can also bring enforcement actions 

alongside state attorneys general, who can often seek civil penalties in the first offense under 

statutes they enforce. This was similar to the approach we took in a 1999 Made in USA 

investigation conducted with Missouri and Connecticut, which resulted in civil penalties.

7

 2 Since the Commission’s proposal, Sandpiper has been purchased by a Chinese supplier, Innovapro, which is 

aggressively fighting a Lanham Act lawsuit by that same competitor. See Innovapro Corp.’s Mot. to Dismiss at 13–

16, Advantus Corp. v. Sandpiper of California, Inc., No. 3:18-cv-01368 (M.D. Fla. filed Jan. 28, 2019). 3 Consumers Union (Comment #6), https://www.ftc.gov/system/files/documents/public_comments/2018/10/00006-

155956.pdf (pointing out that proving “price premium” is not a necessary predicate to seeking disgorgement). 4 For example, the Commission can utilize its authority under Section 13(b) or Section 19 to seek redress and other 

remedies, but the authorities under these sections do not provide for civil penalties that deter misconduct in the first 

instance. See 15 U.S.C. §§ 53(b), 57(b). In my September statement, I discussed further how monetary relief likely 

would have been available through settlement or litigation. I am concerned that the Commission too often asks for 

$0 in settlement discussions.

5 See 15 U.S.C. § 45a. 6 Statement of Comm’r Chopra In the Matter of Social Finance, Inc. Commission File No. 1623197 (Oct. 29, 2018), 

https://www.ftc.gov/system/files/documents/public_statements/1418711/162_3197_statement_of_commissioner_ch

opra_on_sofi_10-29-18.pdf. 7 See FED. TRADE. COMM’N, U.S. ORIGIN CLAIMS: ENFORCEMENT AND COMPLIANCE ACTIVITIES SINCE DECEMBER 

1997 3–4 (1999), https://www.ftc.gov/sites/default/files/documents/reports/u.s.origin-claims-enforcement-and-
3

While these other penalty switches would not deter wrongdoing as effectively as the 1994 

authority, they are far superior to our current approach of seeking no money, no notice to 

consumers and competitors, and no findings or admissions of fact.

Conclusion

At a time when the Commission is seeking greater resources and authority from Congress on a 

host of problems in the marketplace, our call to action will be more effective when we are 

vigorously using our existing resources and authorities to the fullest extent possible.

8

We cannot effectively protect honest businesses and promote fair competition if there are no 

consequences for violating the law. Given troubling trends in today’s economy, I intend to make 

a motion to pursue a Made in USA rule that would allow the Commission to seek meaningful

penalties against those that harm law-abiding companies that make goods in America.

 

compliance-activities-december-1997/musareport.pdf (describing a joint investigation of The Stanley Works by the 

FTC, Missouri, and Connecticut). 

8 Our unused Made in USA authority is not the only penalty switch we have not turned on. It has been nearly a 

decade since Congress gave the FTC streamlined authority to issue regulations that would trigger civil penalties for 

wrongdoing in the auto lending market. See 12 U.S.C. § 5519.
1

Attachment

ACTIVATING CIVIL PENALTIES FOR

MADE IN USA FRAUD 

Summary

To better protect the integrity of the Made in USA label that honest American businesses rely on, 

the Federal Trade Commission (FTC) should codify elements of its longstanding policy into a 

rule that activates civil penalties against first-time violators.

Made in USA Matters

Displaying a Made in USA label is a right reserved for companies that manufacture their 

products in the United States. The Made in USA label signals a sense of national pride and can 

help a brand communicate quality, durability, authenticity, and high standards. Only companies 

that invest, hire, and produce in this country should receive the competitive advantage that the 

Made in USA label can confer.

The Made in USA label is especially important to small businesses, who can tout it to set them 

apart from more established competitors, even if their products may be more expensive. A 2012 

survey by the Boston Consulting Group shows that more than 80 percent of Americans express a 

willingness to pay more for American-made products compared to those made in China,1 which 

is a boon to producers of high-quality American goods. Small businesses that invest in the United 

States may not be able to challenge big players on brand recognition, but they have earned the 

right to compete on country of origin. 

But their ability to compete is now being undermined by a scourge of counterfeiting and fraud. 

The growing proportion of consumer goods purchased online has made it easier for foreign 

counterfeiters to trick consumers and steal sales from companies that tell the truth. According to 

a Government Accountability Office investigation, 40% of brand-name goods purchased from 

third-party sellers on popular consumer websites were found to be counterfeit.2 Meanwhile, 

nearly a quarter of Americans no longer trust that “Made in USA” means “Made in USA.”3 In 

this environment, large incumbent corporations can spend significant resources to defend their 

brands from imitators,4 but small businesses that rely on the Made in USA brand cannot. That 

makes the FTC’s role more vital than ever.

If enforcers are unable to defend our national brand, this puts small firms that rely on the Made 

in USA label at a disadvantage in online marketplaces flooded with counterfeits. Twenty-five 

years ago, Congress gave the FTC a strong tool to defend the Made in USA brand, but the 

agency has never deployed it. It is time to do so. 

Background on FTC Penalty Authority 

While the Federal Trade Commission Act broadly prohibits unfair or deceptive acts or practices, 

the agency’s ability to seek civil penalties paid to the Treasury for first-time offenders is limited.
2

Even when the agency repeatedly finds a practice to be unlawful, violators, regardless of their 

size or sophistication, can still get a free pass for their wrongdoing – and only if they are caught. 

To deter wrongful conduct in the first instance, the FTC must activate a legal switch to “turn on” 

civil penalties for the first offense, which can expose violators to $42,530 in fines per violation.

This activation can be achieved by codifying the unlawful practice in a rule. 

The FTC can codify a rule by initiating procedures under Section 18 of the FTC Act. However,

in some cases, Congress has explicitly provided the Commission with the authority to use 

procedures under the Administrative Procedure Act (APA) – which are more efficient compared 

to Section 18 procedures – to give notice of practices where violations can lead to civil penalties.

Dormant Authority to Combat Made in USA Fraud 

Since at least the 1940s, the Commission has held that under Section 5 of the FTC Act, a product 

must be wholly domestic or all or virtually all made in the United States to support a Made in

USA claim.5 As global trade has accelerated, attention to country-of-origin claims has only 

grown.

In 1994, shortly after the North American Free Trade Agreement (NAFTA) took effect, 

Congress gave the FTC authority to codify Made in USA rules pursuant to streamlined APA 

procedures. Following that legislation, the Commission undertook a comprehensive review of its 

Made in USA program – a review so expansive that one Commissioner at the time compared it 

to a rulemaking.6 What emerged from that review, however, was a statement that reiterated the 

decades-old “all or virtually all” standard for unqualified Made in USA claims. That statement 

and the accompanying guidance remain in force today. 

But “statements” do not trigger the Commission’s civil penalty authority and resulting deterrent 

effect unless codified into a rule. This means that if firms choose to make false Made in USA 

claims in spite of 80 years of FTC guidance and warnings, they are unlikely to face any penalties

on their first offense. 

The Commission can change these incentives by codifying its existing “all or virtually all”

standard as a rule, thereby subjecting all violators to civil penalties. Importantly, by restating the 

FTC’s existing view of the law, such a rule would lead to no additional substantive requirements 

for market participants. The Commission would maintain flexibility to calibrate its approach 

based on the facts and circumstances of violations.

All businesses stand to benefit from clear rules of the road that protect the integrity of the Made

in USA label and punish those who abuse it. 
3

 1 THE BOSTON CONSULTING GROUP, MADE IN AMERICA, AGAIN: UNDERSTANDING THE VALUE OF ‘MADE IN THE 

USA’ (2012) (finding that ~80% of Americans prefer goods made in America to those made in China). See also 

Made in America: Most Americans Love the Idea of Buying a U.S.-made Product Instead of an Import. But 

Sometimes It’s Hard to Tell What’s Real and What’s Not, CONSUMER REPORTS (May 21, 2015, 10:00 AM), 

https://www.consumerreports.org/cro/magazine/2015/05/made-in-america/index.htm [hereinafter Made in America] 

(reporting on a national survey finding that 60%+ of Americans would pay a 10% premium for Made in USA 

goods); Price of patriotism: How much extra are you willing to pay for a product that’s made in America?, 

REUTERS (July 18, 2017), http://fingfx.thomsonreuters.com/gfx/rngs/USA-BUYAMERICANPOLL/01005017035/index.html (reporting on a national survey finding that 60%+ of Americans would pay a 

premium of 5% or more).

2 U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-18-216, INTELLECTUAL PROPERTY: AGENCIES CAN IMPROVE EFFORTS 

TO ADDRESS RISKS POSED BY CHANGING COUNTERFEITS MARKET (2018), 

https://www.gao.gov/assets/690/689713.pdf. 3 Made in America, supra note 1 (reporting on a national survey finding that 23% of Americans lack trust in “Made 

in America” labels).

4 See, e.g., James Vincent, Apple Lawsuit Says 90 Percent of 'Official' Chargers Sold on Amazon Are Fake, THE 

VERGE (Oct. 20, 2016, 3:59 AM), https://www.theverge.com/2016/10/20/13343682/fake-apple-chargers-amazonlawsuit. 5 FED. TRADE. COMM’N, U.S. ORIGIN CLAIMS: ENFORCEMENT AND COMPLIANCE ACTIVITIES SINCE DECEMBER 1997

1 (1999), https://www.ftc.gov/sites/default/files/documents/reports/u.s.origin-claims-enforcement-and-complianceactivities-december-1997/musareport.pdf. 6 “Made in USA” and Other U.S. Origin Claims, 62 Fed. Reg. 63755, 63771 (Dec. 2, 1997), 

https://www.ftc.gov/sites/default/files/documents/federal_register_notices/made-usa-and-other-u.s.originclaims/971202madeinusa.pdf (reprinting Commissioner Starek’s statement that the Commission’s “expansive 

review” was “similar to a rulemaking”). In the course of that review, the Commission considered modifying the “all 

or virtually all” standard around unqualified Made in USA claims, but backed down in the face of “overwhelming” 

consumer interest in maintaining the historic standard. Id. at 63764.