Problems with brand new ipod classic

I purchased a $245 classic for my son's birthday last week. He opened it, was excited, and went straight to the computer to begin using it. Unfortunately, it did NOT work. I can't really say the problems he was having because he was the one using it. I believe he said that it would not format, and that the computer did not recognize the device as an ipod. He then tried it on his girlfriend's computer and it did not work there either. We called Apple and the representative told us to return it to the store. The store told us that it had to go through Apple (per Apple's orders). We called the same guy back and he said to send it in and they would send us a new one. OK, fine. But now they are saying that it was "undetermined accidental damage" and they will not repair or replace it. The ipod did not work from the moment it was opened!!! I find it quite unfair that we now have a brand new completely unscratched $245 paperweight, and no gift for our son. The website does not give me help with addressing this issue. Does anyone out there have any ideas on who to contact next? The guy we talked to in customer service lied to us twice (first by telling us the store would return it, and second by saying they were just going to ship a new one since he had just opened it). We don't really want to bother with him anymore. Our frustration is unreal. Thanks for any insight you might have.

I can't speak for Apple, and I don't think we could speak to what your son did with the iPod (as opposed to following the setup instructions which I believe are in the box, and direct you to www.apple.com/ipod/start to install iTunes), as when I turned my Ipod Classic 160GB on, it simply booted up and started working. No "formatting" was required.
If you have an issue where a vendor promises you a return, then reneges ... turn all your information over to your credit card issuer or bank and ask them to initate a chargeback. That will get the seller's attention.
That's my $0.02.

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