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Part of the way Verizon makes its money is by dragging out issues like this so you are stuck with the phone you originally purchased. That is one reason why I do NOT buy anything from Vreizon Online or over the phone. I will go to either the corporate store or even lately a very trustworthy Third Party Reseller (actually have much better service here than anything Verizon)

That said what I would do is the following.

Contact Customer Relations (not customer service)

Contact the BBB (although they will not do much for you but it will log a complaint for Verizon)

Contact The Federal Trade Commission (they do not like false advertising or cases where the company tries to drag thing beyond the specified trade time)

If nothing gets resolved there, go to a third party reseller and find out the following

1) if they have any slightly used iPhone 4's for sale. My local Third Party reseller usually has a few for under $200

2) ask the third party reseller if they can in fact sell the phone you are trying to change here as they can probably get you the 200 back or close to it

3) Tell all of your friends and co workers about your issues with Verizon so they do not get sucked into the trap as well.

As a side note, I have a ton of respect for what you do and will help any way possible including checking my local third party reseller that I now exclusively use to see if they have one they can do. I will put you into contact with them or whatever is necessary.  I have a son in the Special Ed Program now for the last 12 years and the program has changed his life completely and I owe that to the dedication of the teachers.