* Some people don't know how to put ringtones on their phone. Maybe their phone can only accept over the air ringtones unless they buy a special cable.
* Companies provide a service to send people ringtones.
* Both parties are happy
The (some might say) fraudulent bit is companies that get users to sign up to an automated subscription payment to get ringtones - eg "Get a free ringtone when you sign up" (Small print: subscription costs £3/month and allows you up to 5 ringtones per month).
It may not exactly be fraudulent, but it certainly isn't very ethical business practice.
That being said, I do think it's borderline fraud to bind the phone to the service provider as is common in the North America. Could you imagine if this was done for landlines? I suppose if they continue to subsidise the phone they can get away with it, but again, not ethical practice IMO.
I'd say that's likely incompetence rather than malice.
Consumers were deliberately misled about the value of the product being offered. They were just charging for the service, they were lying that the service was even necessary. Sure it's not black and white, but Verizon etc. erred on the side of anti-consumer behavior in the case of ringtones and got away with it.
The reason people didn't know how to upload things to their phones is because the phone companies made it really hard. Since we're talking about facebook, it would be like facebook making it difficult to include links to external sites and charging for the priviledge.
A "facebook gift" picture of a flower has value because it's a facebook gift. A verizon-provided ringtone has the same value as an identical recording of the same ringtone you uploaded yourself.
Of course it's profitable. It's fraudulent. Telecoms deliberately crippled technology and deceived consumers into thinking that downloading and uploading ringtones to your phone wasn't trivially easy.