You received a subsidy on your Home Phone Connect in exchange for signing a 2 yr contract.
The return period for Verizon without having to pay an ETF has been 14 days for at least a couple of years now.
You returned the device after 21 days, which falls outside of that 14 day period, which is why you were charged an ETF of $175.
When I purchased my Home Phone Connect, the full retail price was $129 however I see it is now down to only $99. The way I see it, why would I sign a 2 yr contract with an ETF of $175 when the full retail price is less than the ETF??? It makes even less sense now that they have dropped the price to $99.
Regardless, if you signed a contract and returned the device after 21 days, you are liable for the ETF.