A Statement from Thumbplay Inc.

A major mobile content provider has rung up a sizable lawsuit following allegations that it unlawfully charges cellular telephone customers for unwanted services.

Chicago resident Nikolay Antonov filed a class action complaint in Cook County Circuit Court against Thumbplay Inc., a New York-based company that offers ringtones, music, games and graphics to cell phone customers.

According to the suit, filed Monday, the rapidity with which the mobile content industry has grown has led to “a disastrous flaw:” Billing and collection systems put in place by companies like Thumbplay have no “checks or safeguards” to protect against unauthorized charges showing up on customers’ bills.

“Cell phones are morphing into credit cards, but the same security procedures don’t apply to phone numbers, which are public information,” said Myles McGuire, Antonov’s lawyer. McGuire works in the Chicago office of KamberEdelson LLC, a law firm specializing in technology class actions.

The firm has successfully settled cases with media giants such as Facebook Inc., and, at the end of May, it reached a third-party mobile content settlement with AT&T, the first nationwide settlement of its kind. According to McGuire, KamberEdelson has 11 cases of this nature currently pending.

The lawsuit, which Antonov has filed on behalf of both Illinois wireless customers and defrauded customers nationwide, implicates players on all levels of the industry: aggregators, who act as middlemen between mobile content providers and wireless carriers; copyright licensors, who collect money each time a customer is unlawfully charged for an unwanted song or ringtone; and affiliate marketers, Internet advertising networks who fail to clearly display the “service’s price, subscription period and cancellation procedures,” the suit states.

Although McGuire could not put a dollar amount on damages for the whole class (that depends on the size, which has not yet been ascertained), he said Antonov is “looking for a recovery for the amount of money he was charged for premium text message services.”

McGuire said the suit does not explicitly accuse Thumbplay of purposely defrauding customers. “We’ve alleged in the complaint that it's either passive indifference or active cooperation in a scheme to defraud,” he said.

According to a research report by Forrester Research Inc., mobile commerce caught the attention of U.S. retailers in 2006. Massachusetts-based business intelligence company Informa Telecoms & Media reports that the mobile content and services market, which was estimated at $89.3 billion in 2006, is expected to rise to $150.2 billion in 2011.

Thumbplay Inc., founded in 2004, has been riding the wave of the new technological phenomenon, racking up a number of high-profile partnerships over the years. The company, which has a cadre of high-profile equity investors such as Bain Capital Ventures and Meritech, teamed up with Sony BMG Music Entertainment in February, Universal Pictures in October 2006 and inked a deal with Universal Group this month that allows the company to carry exclusive ringtones from recording artist Shawn “Jay-Z” Carter.