+1 on credit card claim (I didn't think it will get this far).
For this to work, though, you have to have a good log of your attempts to contact a merchant and negotiate with them "in good faith".
This means all your calls, dates/times and names of people you spoke to.
The line IMHO should be:
"
On 7/97/2009 I decided to purchase HTC Fuse from Telus. I visited Telus' web site at ... and made sure of their return policy (found at ...) that explicitly permits 20 days for any returns.
I proceeded with the purchase and used my <card name> as a payment in full.
3 days after the delivery I discovered a number of serious flaws with the device which would make it impossible for me to continue using it. Therefore, I needed to return the phone to Telus. I inquired by phone to their customer service (800-555-1212) on 7/98/2009 at 11:00AM ET. I spoke to representative named ... who told me that they would not accept a return. No reason was provided.
Subsequently, I verified again that the Telus' return policy (copy attached) explicitly permits the kind of return I was trying to make. On 7/99/2009 at 1:00PM ET I contacted Telus customer support again (at 800-555-1212) and requested to speak with a supervisor (whose name was ...).
She stated again that they would not accept a return, because it is a "data phone". I mentioned that the legal return policy currently in effect does not have these kind of exclusions, but the supervisor on the phone just repeated the denial statement."
Substitute underlined with your specifics.
Call the card first and tell them all this so that they can advise you on the procedure (where to send a letter to, what to do with the phone, etc.)
Do it now, before 20 days are up, and write down everything.
This should win, unless there is some crazy law on the books in Canada about "no returns on data phones"...