i placed an order for an electronics item at allmediaoutlet.com and when it came it was a broken hunk of garbage. they don't have anymore and won't be getting any either. they said they will refund the purchase minus shipping. their return policy states that too now that i read it, but still they sold me a nonworking item and have no replacement how can they refuse to give me all my money back, it's not MY fault. What's to stop a company from constantly sending out garbage and just collecting outrageous shipping costs from each order? they even said they may charge a 15% "restocking" fee as well....

I'd say you have a point there.
if you just changed your mind and wanted to return it, then you pay shipping and a restocking fee.
If the item was misrepresented or they sent out the wrong thing, they should cover the shipping.
If it was damaged in transit, you might have to fight with the carrier to recover your costs.

Simply dispute the charge with your credit card company (if that's how you paid).

You're out of luck if you paid by any other method. Unless you plan to sue (which is not really feasible for shipping charges).

take the lump sum