My rights, faulty goods return postage?

Hi,
I recently bought a PC wireless adapter item from a registered business seller from ebay, on a buy-it-now basis. It was DOA. I contacted the seller who said I can return it for a replacement or a refund. However, he will not cover the costs of return postage.
When I look on the OFT distance selling regs it states this:

3.57 If the goods are faulty or do not comply with the contract, you will
have to pay for their return whatever the circumstances.

http://www.oft.gov.uk/shared_oft/business_leaflets/general/oft698.pdf

whereas the seller has said this
[FONT=&quot]As far as my knowledge of the distance selling regulatiosn goes, we do not have to pay for the return postage of a faulty item if we state it in our T's and C's and inform the customer of this beofre the item is sent back. [/FONT]

I think he is trying it on, and he does have to cover the costs-or am I reading the OFT thing wrong?