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UPS lost defective phone

I received a replacement phone because my old one was defective.  The next day I placed the defective phone in the box, added the provided return label and sent off at the UPS store. 

I chatted with a representative of Verizon a couple weeks later because the phone hadn't yet arrived.  He took the tracking number and said not to worry.

Today I was notified I'm being charged $500 for the lost defective phone.  This fight is between Verizon and UPS, I shouldn't be charged for this.

Re: UPS lost defective phone
Customer Support

bigrob94, we regret that your old phone may not have been received to our warehouse. This is not the experience we want for any of our customers. Allow us to investigate this so we can find a resolution. I'm sending you a Private Message so we can gather account specific information in order to assist you further. Please reply back to us in the Private Message to continue.  AliciaD_VZW