Monthly Archives: December 2014

Beware of New Wire Transfer Dangers in Real Estate Transactions

By Bruce Ackerman, Esq.

I attended a real estate closing recently for a cooperative development and had a shocking story told to everyone by the buyer.  The buyer had her gmail account hacked by someone overseas, and they sent emails that resembled her attorney’s account.  The email actually had a slightly different email address that included the firm name of her attorneys, and had the look and feel of the real emails she had previously received from them.  They copied her attorney’s firm logo as well.  The final act was the email to her to wire transfer her closing funds to an account in Miami, Florida.  All the details required for the wire were included, even the phone number to verify the information.

The buyer initiated the wire of funds that was required for the closing later that day.  The buyer did not realize that the trust account of her NJ attorney had to be in a NJ bank.  Only due to her bank calling the attorney’s office was the hacking revealed, saving this buyer from a mistake of more than $500,000.  She also called the number on the wire sheet, and someone answered, but obviously not from the attorney’s office.

In this transaction, the hackers did not stop, still falsifying emails to the buyer’s attorney.  The personnel at the attorney’s office eventually wired out funds intended for the sellers, but wired the money to the hackers based upon another fake email with wire instructions.

This is a new hacking method being reported in real estate related transactions.  The fraud targets wire transfers in real estate transactions, including wires of earnest money deposits and, as shown, closing proceeds.  Apparently, these criminals hack into and intercept emails by searching for wire transfer requests and the emailing of the 13 digit number that makes up the digits in bank accounts.  The hackers then start their process of “invading” the communications and intercept the lawful ones.  The fake emails have the same attributes as the real ones they are meant to resemble.  They may keep communicating with the target victim, so that there is no suspicion that a third party has hacked into the stream of emails.

The hackers may even use the same bank and just change the last numbers for the account to be credited.  If the funds get wired, the money will be gone and wired out overseas before the fraud is even noticed.

In order to ensure the safety of wire transfers, far more caution is needed.  Here are a few precautions to be taken, including one very simple one.  If you are sending a wire, you should contact the party who sent the instructions by phone to confirm the account numbers verbally prior to sending the funds.  Another precaution is to send wire instructions via encrypted email or fax only.  Beware.

If you have any questions about this topic, please contact Bruce Ackerman at or at 201.488.8200.


Unconscionable Commercial Practice

By Suzanne M. Bradley, Esq.

In an opinion analyzing what constitutes an “unconscionable commercial practice” under the New Jersey Consumer Fraud Act (“NJCFA”), the United States District Court for the District of New Jersey recently dismissed a putative class action brought under the Act and New Jersey common law regarding defendant Novartis AG’s pricing of its Excedrin Migraine product.  In Yingst v. Novartis AG, 2-13-cv-07919, District Judge Claire Cecchi determined that Novartis’ pricing of the product, while strategic, was not illegal under the NJFCA, and therefore dismissed Plaintiff’s claims.

Plaintiff Kerri Yingst alleged that Novartis sells Excedrin Migraine and a pharmacologically equivalent product, Excedrin Extra Strength, at different wholesale prices which in turn caused Yingst and other consumers to pay a premium for Excedrin Migraine, despite the fact that the two products consisted of “identical ingredients in identical quantities.”  Compl. ¶21.  Yingst alleged that at the time she purchased Excedrin Migraine, she believed that because Excedrin Migraine was sold at a higher price, it was a more effective product for migraine relief.  Novartis moved to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6), and the court granted the motion.

As Judge Cecchi explains, New Jersey’s strong Consumer Fraud Act provides that a plaintiff is entitled to treble damages, reasonable attorneys’ fees, and reasonable costs if she proves that the defendant engaged in an unlawful practice that caused an ascertainable loss.  In this case, Plaintiff did not argue that Novartis committed any affirmative act of deception, fraud, false pretense, false promise, or misrepresentation, and did not argue that Novartis knowingly concealed, suppressed or omitted any material fact with intent to induce reliance.  Instead, Plaintiff contended that Novartis engaged in an “unconscionable commercial practice” within the meaning of the NJFCA by using the U.S. Food & Drug Administration (“FDA”)’s requirement that Excedrin Migraine and Excedrin Extra Strength have separate packaging as a means to extract a premium from consumers while providing no extra benefits.  The New Jersey Consumer Fraud Act does not define the phrase “unconscionable commercial practice.”  However, Judge Cecchi noted that the New Jersey Supreme Court has defined the term as an act lacking good faith, honesty in fact and observance of fair dealing.  Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 655 A.2d 417, 429 (N.J. 1995) (citing Meshinsky v. Nichols Yacht Sales, Inc., 541 A.2d 1063, 1066 (N.J. 1988)).  As with the broader Act, New Jersey case law provides that the phrase “unconscionable commercial practice” should be interpreted liberally to effectuate the Act’s public purpose.

In the case at hand, Judge Cecchi noted that there was no dispute that both Excedrin Migraine and Excedrin Extra Strength were properly labeled and contained no misinformation regarding the medications.  Therefore, because Plaintiff had conceded that there was no dishonesty by Novartis, Judge Cecchi determined that its pricing of Excedrin Migraine was not an act that lacked good faith or honesty in fact.  Further, Judge Cecchi found that Plaintiff could  not establish that Novartis’ pricing of Excedrin Migraine lacked fair dealing; Plaintiff did not cite any cases, and the Court was aware of none, in which an “unconscionable commercial practice” was found under the Act based solely upon disparate pricing of substantively identical products manufactured by the same defendant.  Although the dearth of case law was not itself fatal to Plaintiff’s claim, the fact that Plaintiff paid, at most, $1.05 more for a 300-count package of Excedrin Migraine than for a 300-count package of Excedrin Extra Strength was a “minor detriment” that did not “rise to the level of unfair dealing.”  While Novartis’ creation of a pricing structure in which migraine sufferers paid a higher price for pills pharmacologically identical to Excedrin Extra Strength in order to obtain the directions and warnings mandated by the FDA was “strategic,” Judge Cecchi held that such behavior was not proscribed by the NJCFA and dismissed Plaintiff’s NJFCA claim.[1]  As Judge Cecchi’s opinion demonstrates, slight price differentials in otherwise identical products, absent any evidence of misrepresentation or misinformation, are “within the bounds of reasonableness and concomitantly outside the ambit of the NJCFA.”

[1] Judge Cecchi also dismissed Plaintiff’s unjust enrichment claim.  In New Jersey, a constructive or quasi-contract is a vehicle by which a plaintiff may enforce a public duty to prevent unjust enrichment or unconscionable benefit.  To state a claim for unjust enrichment, the plaintiff must allege (1) at plaintiff’s expense (2) the defendant received benefit (3) under circumstances that would make it unjust for the defendant to retain the benefit without paying for it.  Judge Cecchi again noted that Plaintiff did not allege any misrepresentation or misinformation by Novartis, and also did not allege that Excedrin Migraine failed to relieve her ailment or that Excedrin Extra Strength performed better than Excedrin Migraine; Plaintiff “deliberately purchased the higher-priced product and received exactly what she paid for.”  See Def.’s Reply p. 6.  Therefore, the Court found nothing “unjust” about Plaintiff’s transaction, and granted Novartis’ motion to dismiss with respect to Plaintiff’s unjust enrichment claim.