Firstly, if this was an amount you could write off then I would. Seriously. This is entirely subjective, though. Litigation is both expensive in terms of money and self. It is prolonged (he may well have done this before and knows how ) and will grind you down. Litigation is for either people with nothing or people with a lot. The latter pay someone else to have the headache with their money, whereas the former get the rest of us to pay.
Legally there are a number of errors. 1. Damage in transit. Who is liable? 2.Seller agreed to refund ergo accepts liability. 3. He states `no delivery`. Fed-ex did deliver the item but apparently to the wrong named person - not necessarily a different person, but may be. If they left with the incorrect person (by name) they have not correctly `delivered` the item. Delivery is a legal part of Contract Law. You paid for a service. You have rights. 4. There is a confusion you say over the name of the seller. This is fundamental. It strikes at WHO is the contract with? It strikes at WHO, therefore, should have signed for it in the U.S.? 5. ebay is a facilitator site; it brings two sides of a contract together. From what you say there seems to be no fault there. This may or may not be correct ultimately. 6. How much was the insurance in transit? Was it adequate? This will be a ceiling on what you could receive if you were covered. 7. The UK police seldom get involved even if it is a clear case of fraud. It is outside their jurisdiction. They do get involved in certain illegalities committed abroad but this is, I would judge, a private case.
All of the above is why I gave the advice I did at the start. Caveat emptor is at work: the buyer should know who is the other party to the contract. I`m not sure you were (I may be wrong).
Good luck........I think you`ll need it in this dishonest world.
By the way, hate to burden you further but that`s £175 plus VAT....only joking. However if you go to a solicitor it will not be the case. You will do what many people do: throw a lot of good money after bad. Sorry to be the bearer of ..........