Suit claims Jamster's ad lures children into costly contracts

New Orleans CityBusiness, May 2, 2005 by Richard Slawsky

When New Orleans resident Jessica Chanson signed up on the Jamster.com Web site, she thought she would receive a free ringtone for her cellular phone.

When her Cingular Wireless bill arrived the next month, the 18- year-old Chanson was stunned to see a charge for $79.21 listed as Direct Bill. When she called Cingular's customer service department, she discovered the charges came from Jamster.

All I did was download a ringtone, Chanson said. I didn't know I was signing up for anything else.

Chanson didn't realize that buried deep in Jamster's terms of service agreement - the page of legalese anyone who registers on the Web site agrees to - was a commitment to subscribe to Jamster's monthly service for $5.99 per month. Unless Chanson canceled the service, the subscription would renew every month whether or not she downloaded content.

She also didn't realize the daily text messages Jamster sent to her cell phone cost her $1.99 each. By accepting the messages, Chanson's cell phone bill nearly doubled to $199 in March.

A lawsuit filed against Jamster in April accuses the company of false advertising. San Diego resident Charles Ford, whose teenage daughter racked up hundreds of dollars worth of charges from Jamster, brought the complaint.

The suit charges that Jamster, which advertises heavily on television channels such as MTV and Nickelodeon, lures children into entering into a contract they don't understand.

Jamster, called Jamba in Europe, is a German mobile phone content provider. Mountain View, Calif.-based VeriSign, which provides security services for Internet transactions, acquired it in June 2004.

Verisign generated sales of $1.2 billion in 2004.

The suit names VeriSign, Jamster, Jamba and three wireless service providers with third-party billing agreements with Jamster: T-Mobile USA, Seattle-based AT&T Wireless Services; and Atlanta- based Cingular Wireless. AT&T Wireless has since been acquired by Cingular. Duesseldorf, Germany-based Deutsche Telekom owns T- Mobile.

Jamster officials declined to comment on the specifics of the suit.

We wanted to assure you that we believe this lawsuit to be frivolous and we will fight it aggressively, said Dan Mosher, director of mobile content services for Jamster U.S. Jamster takes customer service very seriously.

Jamster clearly and explicitly spells out subscription pricing in every TV advertisement, Mosher said. Pricing is also disclosed in the text message a customer receives when they order, he said.

Consumers can opt out of Jamster's service at any time by sending a text message to Jamster, calling the toll-free customer service number or canceling the subscription via the Jamster Web site, he said. Jamster requires subscribers to be of legal age to buy its products or have a parent's permission, he said.

Officials from T-Mobile and Cingular also declined to comment on the lawsuit. Cingular officials are reviewing their policies regarding third-party content providers, they said.

According to a study by mobile market research firm Consect in New York, global cellular phone ringtone sales topped $4 billion in 2004. In the U.S. market, sales doubled from $150 million in 2003 to more than $300 million for 2004. The United States is one of the fastest-growing - and largely untapped - markets for mobile music, the report said.

Cellular providers worry consumers hit with unexpected charges from a service like Jamster will walk away from their contracts, which would hurt earnings.

Our ringtone content is delivered thorough our own 'Get it Now' service, said Patrick Kimball, spokesman for New York-based Verizon Wireless. That allows us to know what is going on with the content in the sense that we can make sure there are no viruses or spam or things like that are being delivered.

Postings to several Jamster complaint Web sites show the company is offering refunds to unhappy customers. Chanson e-mailed Jamster's customer service department demanding the charges be removed from her bill and received a response the following day.

We are also sorry that you were unhappy with our services. Of course we are prepared to refund our charges, read the e-mail from Jamster. Please be aware that we are offering the refund out of goodwill and are not recognizing any statutory duty.