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Under what name is the separate collection reporting?
Then they stated that they referred to their internal collections department, and it is not a third party collection.
If they acknowledge that the debt was never delinquent, then the reference to collection would only be proper if the debt were delinquent.
I would call the rep and explain that, while the billing issue was corrected, the issue of credit reproting was not.
If they wont informally correct, then send in a dispute to the CRA, along with your supporting documentation that they acknowledge there was no delinquency upon which to base the adverse reporting.
Credit companies removed this stupid collection account after I sent them a letter.