Debt Collection for no service?

My neighbour gave me the phone number of a dry cleaning company and I rang them and gave them my details. The next day I saw the work they had done and it was dreadful, my neighbour complained to the company and he was yelled at and they hung up on him. I rang them the next day and told them I did not want their services because of the poor work I had seen. The woman I talked to then yelled at me and told me I would have to pay $70 cancellation fee. I said I would not be paying it, she told me I had to as it was in their ad (I had never seen their ad). Since then I have had 2 abusive phone calls and three letters of demand from the company. The last letter was a final letter of demand for $35. I have replied to each letter explaining that they provided me with no service and no contract was signed. Since then I have received 2 threatening letters from a debt collector stating I would be taken to court and have court costs awarded against me. I have asked for any documents they have, so far nothing. The debt agency even rang me and said they had a strong case against me. I have never received any service from this company and I strongly object to them trying to force me to do business with them. I feel like they are bullying me to try and steal my money. Has anyone else ever had an experience like this? Any information about what I could do to stop them harassing me would be appreciated.