What is the ruling on buying a used mobile phone, only to discover later that the seller had misrepresented its condition and capabilities, and refused to take it back or refund the money?

If the phone has a significant defect that diminishes its value, and you only became aware of the defect after purchasing it, then you have the right to return the phone to the seller and reclaim the price. This is a matter on which there is no disagreement among scholars. Some scholars permit keeping the phone and receiving compensation from the seller equivalent to the reduction in value caused by the defect; this is the view of Ishaq. However, Abu Hanifa and Al-Shafi'i hold that one has only the option to keep the item or return it, and is not entitled to "arsh" (compensation for defect) unless returning the sold item is impossible. In case of dispute, the matter is referred to the judiciary.