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Joint Statement of Commissioners Noah Joshua Phillips and Christine S. Wilson

U.S. v. iSpring Water Systems, LLC. et al.

Matter No. C4611

April 12, 2019

In February 2017, iSpring Water Systems LLC (“iSpring”), a Georgia-based distributor of water 

filtration systems, entered into an administrative agreement and consent order with the Federal 

Trade Commission. The consent order prohibited iSpring from making misleading claims that its

products are made in the USA. Despite, and in violation of, this consent order, in March 2018 

iSpring again began advertising that some of its wholly-imported products were made in the 

USA.

In response to these ongoing violations of the Commission’s administrative order, the FTC is

filing a federal district court complaint for civil penalties, and other relief, against iSpring and

John Chen and Pearl Cai, as individuals and corporate officers of iSpring. To settle this action,

defendants—unrepresented by counsel at the time—negotiated a stipulated federal district court 

order, containing several features. First, John Chen and Pearl Cai, corporate officers of iSpring, 

have agreed to be held individually liable for the violations of the administrative order, and are 

named in the federal district court complaint and order. Second, all three defendants, iSpring, 

Chen and Cai, have agreed to admit that the allegations in the FTC’s original complaint are true, 

including that they made misleading and false Made in the USA claims. Third, the defendants 

have agreed to pay a $110,000 civil penalty. Finally, the order requires that defendants notify all 

consumers who purchased the products that the FTC has sued them for false advertising and that,

according to the FTC’s complaint, they made misleading claims that their imported water 

filtration systems were made in the United States.

We agree that the defendants’ actions in this case were deliberate and in direct violation of the 

Commission’s administrative order, which is why we support this consent order. We have two 

concerns, however, about the remedies we have applied. First, we are concerned that, in a case 

where defendants negotiated a settlement without counsel, we have pursued a combination of 

remedies—in particular, the defendants’ admission of liability together with notice to 

consumers—that may penalize the defendants more than necessary to punish the defendants and 

deter future conduct. Some of our colleagues have articulated their view that the Commission 

should seek more and new kinds of remedies. Our view is that remedies have a purpose; that 

experience and learning tell us how best to use them; and that more is not necessarily better. The 

Commission has an obligation to ensure that the relief in our orders is tailored carefully to the 

facts and circumstances of each matter—just because we can seek and obtain a particular remedy 

does not mean that we should.

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Second, the extension of the remedy of an admission of liability to these facts is not self-evident.

While defendants here deliberately made false statements, those claims arguably went to 

secondary characteristics of the products—consumers did get filtration systems, which did work. 

 1 See, e.g., AMERICAN BAR ASSOCIATION SECTION OF ANTITRUST LAW, PRESIDENTIAL TRANSITION REPORT: THE 

STATE OF ANTITRUST ENFORCEMENT 30-32 (2017) (discussing the scope of relief in FTC settlements), 

https://www.americanbar.org/content/dam/aba/publications/antitrust_law/state_of_antitrust_enforcement.pdf.
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While the facts of this case—the defendants deliberately misled and then were deliberately 

contumacious—support an admission of liability, from a policy perspective we are still 

concerned that the Commission is sanctioning use of an admission of liability before fully 

contemplating the ramifications of this policy change. We believe it will be very difficult for 

staff to obtain admissions of liability in settlement negotiations with defendants represented by 

counsel. As a result, we may end up penalizing only those that do not have the wherewithal, 

representation, or funding to negotiate. Instead, we believe the better course would be for the 

Commission to consider carefully the circumstances under which we should be pursuing 

admissions of liability before extending this practice to new areas.