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Charged for unreturned phone after old phone stopped working

I went into a vz store to fix my 1 wk old phone. There was nothing they could do there so they sent me a new phone by next day mail. So far everything is good. I set up new phone and return old phone using their UPS shipping label. The next billing cycle I was charged $900 because the phone wasnt returned. We call vz and track the package. First they said it wasnt their problem. Then we gave them the tracking number and it showed the package was "in transit", one month later. They took the charge off. Now almost 2 months later, the charge has returned and the package remains "in transit".  I tried to make a claim with UPS online and it says they cannot make a claim.

Vz wont remove the charges and we have no idea if vz has begun an investigation.  I refuse to pay for a phone that was shipped back using verizons prepaid shipping label. 

Does anyone have any experience with this sort of experience who can give advise?