On December 10, 2021, I purchased a ticket from Vancouver to Bologna, Italy, returning from December 19, 2021 - January 1 , 2022 through travel agency but paid for the upgrade to business class directly through the KLM website.
I had no problem flying to Italy, however, when coming back upon boarding the plane, they had to change to a smaller plane and I was bumped out of my Upgrade seat and returned back to economy.
KLM said that they would give me a refund on my upgrade along with additional compensation.

After months of reviewing my claim, KLM then told me that they cannot give me the refund and I will need to go back to the travel agency) for that.
I have paid for economy comfort, and also paid an additional to upgrade to a Business class seat when offered.

It has been almost 10 months now, I have tried to contact the travel agency; however they have directed me back to KLM , and KLM will not be able to do anything for me at this time. I have tried to contact them by telephone, emails, messaging, whatsapp in the last 10 months. No one has responded.

I'm getting very frustrated when they would not deal with this. I'm very disappointed that such a big corporation who promised to pay back and then refused!!!!

KLM is being ridiculous. Of course the travel agency can't help you, so no reason to call them. Also, all those other forms of communication (emails, etc) are worthless. If you have any patience left at all, you can continue to call and ask for escalation, even if they say it's already been done. You just have to continue to press them by phone.

However, if you've run out of patience the only recourse is small claims court or whatever version of that you have of that in Canada. In the US, it's $5,000. and under. They will not contest it, and they will just need to know where to send the money.

Check elliott.org for assistance. They help a lot of people with complaints like this. Keep all your communication by email so you have a paper trail, by the way. Elliott.org also has a list of the emails of company executives, who often will resolve problems like this after receiving a short factual email.

Welcome to Fodors. You've posts this on the Canada forum and the topic has noting to do with Canada or travel there. For Fodors the best place to post this would be the Air Travel forum, You can ask the moderators to move your thread there (you do this by clicking the little orange triangle which opens a dialog box where you can communicate directly with moderators)

But my main suggestion is you may want to register and post your questions on FlyerTalk (run by the sam company as Fodors). There are a lot of helpful members here on Fodors . . . But Flyertalk has hundreds of thousands of air travel geeks who know everything about anything airline-related. In fact I think I've see almost identical questions like yours about refund problems w/ KLM and travel agencies. You'd probably get some definitive advise/suggestions within 30 or 40 minutes.

https://www.flyertalk.com

This is what I found when Googling "EU regulations about bumping"

If you are bumped, EU and UK consumer law guarantee you compensation. Under EU law - specifically Regulation 261/2004 - airlines must first appeal to passengers to voluntarily give up their seats before forcing anyone off the flight. The UK's 'denied boarding regulation' has the same stipulation.Jul 26, 2022

How frustrating. Earlier this year I booked tickets for three people from Warsaw to Winnipeg on KLM. During seat selection, which was through Delta because part of the route was on Delta flights, it came up that the group would need transit visas to change planes in Minneapolis, the USA. This was out of the question in our circumstances so I cancelled the tickets. Same day cancellation so I was entitled to a full refund.
To keep it short, it was impossible to contact KLM. Their telephone line actually had a voice announcement that said they were too busy to take calls and just hung up on me. On my own I figured out how to request the refund on their web site and did so. Heard nothing for six months, then the refund hit my credit card out of the blue. Unbelievable.

Great advice from all above, Maykam, especially what Janisj is suggesting.
We're currently dealing with Trenitalia over a similar rip-of situation---we can commiserate.
Best of Luck.
I am done. The end.