More than 1,000 Washington state state consumers will be getting refunds totaling over $300,000 as part of a settlement with a debt reduction firm accused of violating telemarketing and consumer protection laws.

Attorney General Christine Gregoire says the settlement involves Debt Solutions, Inc., DSI Financial Inc., and their affiliates. State attorneys contend the firms used high-pressure sales tactics and misrepresented consumers in a sophisticated telemarketing operation to sell the debt reduction service.

DSI, based in Boca Raton, Florida, operates call centers in Spokane and Seattle, targeting consumers throughout the country who are trying to reduce their debt.

In the settlement, filed in Spokane County Superior Court, DSI has agreed to operate in compliance with state and federal telemarketing regulations.

The investigation of DSI uncovered a telemarketing operation using a 3-person team: a "fronter" or "opener," who initially called to "qualify" the consumer based on his/her credit, a "closer," who pitched DSI's services to the consumer and made the sale, and a "verifier," who tape recorded the conversation as evidence of the deal.

The "fronter" asked the consumer to provide a major credit card number and the last four digits of his social security number, then he checked to make sure the consumer had $520 left to spend on a credit card before moving him on to the "closer" to pursue the sale.

Gregoire says DSI used "high-pressure tactics and misleading pitches" to sell their product to people who couldn't afford more debt, adding that "consumers deserve every penny back."

A lawsuit, filed simultaneously with the settlement, alleges DSI violated the Commercial Telephone Solicitation Act and the Consumer Protection Act by: requiring credit card payments, misrepresenting the $499 charge to consumers and the $2,500 guaranteed savings, telling consumers there was a "no-cancellation" policy when in fact there is a three-day right of cancellation after receiving notice of the sale, and using high pressure sales tactics such as telling consumers not to check with their spouses before buying.

DSI's president Kenneth Schwartz is named in the lawsuit along with Debt Solutions, Inc., DSI Financial, Inc., DSI Direct, Inc., and Jennifer Ruth Whalen, who operates another named defendant, Pacific Consolidation Services in Spokane.

Civil penalties total $250,000, $225,000 of which is suspended as long as DSI adheres to the settlement agreement. The company will pay $35,000 in attorney fees and court costs.

Washington state consumers who request a refund will be provided one in full, minus any partial refunds already received, within ten business days of DSI receiving the request. DSI will mail out notices to Washington consumers instructing them on how to obtain a refund as part of the settlement.