Huge screw up AT&T

I bought my wife a new phone may ‘21. The store messed up and opened 2 phones and lines on my card, they refunded the first charge but never cancelled the first phone.

In September I realized I had been being doubled charged, we called customer loyalty and spent 4 hours explaining the situation to a few different people, eventually getting everyone to realize we never had the first phone, it had never been used as far as the system could see. I was refunded 480$ for 4 months of wrong charges. Today my wife gets a call from collections, for AT&T 1300$ So the first 480, the 480 they refunded me, and the 4 months following the “fix” all were charged to us, and then sent to collections without any notification to us of a outstanding balance. When we called AT&T they said there’s nothing we can do except pay. Is there any way to fix this, without having to shell out 1300$? Did we just get a bad customer service rep?