Warranty issue - phone returned as damaged

Upfront I admit that:

I didn't read the paperwork close enough before I signed on the line so let this be a warning for anyone with warranty issues (and have a magnifying glass handy).

Story:

August, 2014 went into a local ATT dealer and bought one phone for my daughter and one for my son on payment plans along with the bill for wireless service.

After about 2 months my daughter's Samsung Galaxy 4 started to randomly turn off and on.

Sometime at the end of November or early December I took the phone back to the place I bought it and they said there was a problem-they called ATT and both agreed it was beyond repair and sent me a new phone.  I sent the defective one back and thought we were done with it.

Yesterday I got the old phone back with a letter stating, ..."Unfortunately, we are returning your phone due to the following condition:  Cracked, Damaged, Smashed, Chewed Plastic/Faceplate..." and ATT stated there would be a charge of $469.00 on my next bill.  This is in addition to the other Galaxy phone I'm paying for on a monthly basis.

I was on the phone for half the morning, getting nowhere (and I felt really bad for the first woman I spoke to from Kentucky-she was very nice) with anyone (I did speak with the first woman's manager). 

I bought my daughter a cover for the phone for her birthday in August and the face of the phone is in perfect condition.  It turns out that there is "damage" where the plug goes in to charge the phone.  After getting a magnifying glass out I could see some wear inside where the charging chord plugs in but that was all.

My issue:

1.  The ATT store I bought it did not find any damage when they originally called about getting me a replacement phone and did not say anything about any damage preventing repair or replacement due to something like this.  Neither did they mention anything about having to pay for it.

2.  As a common, untrained person, having no trouble with the phone charging how in the world would I know to look inside this space (and had I even thought to do that, how would I know that it was damaged when it has always worked fine) or that a $75 repair would be cause to be charged $500.  The rest of the phone doesn't have a scratch on it.  If the store didn't find it how would I be expected to???

3.  The phone was charging fine-the issue is with the internal electronics.  I have no problem with any "damage" that might be in the charging port.  Honor your warranty, fix that part that is the issue and send the otherwise "damaged" phone back to me and I'll send back the new phone both you and your agent decided to send me.

4.  The charging port is a $14.00 part on line-you can't replace that and fix the electronic issues (but it was working fine so it didn't need to be replaced anyway)?  If you can replace the electronic issues I'll pay for the charging port part.  If you can't fix the electronic issue then does it really matter whether the $14.00 charging port is "damaged" or not?

I have contacted Samsung and they're going to take a look at it to see if it is under warranty and if not they are going to have someone call me with an estimate to fix it-but they are not going to charge me almost $500 for a phone that stopped working 2-3 months after it was purchased. 

I've been with ATT almost since the dawn of the cell phone, have paid for a number of phones for a number of kids and currently have three lines.  I'd rather not go somewhere else but of course I think this is an insane policy no matter what paper I signed (what choice did I have-I don't sign it you don't warranty it-I already had the new phone-I'm over a barrel).  I have no problem with the phone charging despite the "damage" that is there-I just want you to have the integrity to stand behind the product you advertise and sell. 

I'll see what Samsung has to say in a few days.  At the least they will call me back and talk to me before charging me for a phone that was defective to begin with. 

I'm sure there is a very reasonable explanation for this policy but I'm fairly sure it's not one that keeps customers (but I'll admit, I'm a bit biased at this point).

Respectfully submitted.

[Subject edited for better exposure]