By Julie Watts

SAN FRANCISCO (CBS 5) — An Arizona-based debt reduction firm that charged a Bay Area couple an up-front fee of nearly $1,300 for its services has refunded the money, after a CBS 5 ConsumerWatch volunteer contacted the business.

Samuel Smith of San Francisco said he first heard about Phoenix-based A.W.D. last year, when a company representative called from out of the blue and offered to help reduce his credit card debt.

“They said they had connections with the banks and the credit card companies,” Smith told ConsumerWatch. Smith said the company promised to reduce his debt by $3,700, but only if he would pay $1,295 first.

Smith paid the money and provided A.W.D. with his credit card information.

Several months later, when Smith’s credit card balances had not budged, he called his creditors.

“He contacted all of the credit card companies to find out if any interest rates had been reduced, if there was any activity on the part of A.W.D.,” wife Dianne Smith recalled. “There was no activity at all.” Looking for help, Dianne Smith called ConsumerWatch.

Last month, a ConsumerWatch volunteer contacted A.W.D. on the Smith’s behalf. The company has since refunded the Smith’s entire $1,295. A ConsumerWatch producer’s call to A.W.D. was not returned. The company has an “F” rating from the Better Business Bureau.

Rick Harper of the Consumer Credit Counseling Service warns consumers to beware of for-profit companies that offer debt reduction services.

“They call during the day, they call at night, they have very engaging voices to encourage people to talk to them,” Smith said. Harper said it’s illegal in most states to charge an up-front fee of more than $50 for debt reduction services.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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