Verizon says my apple watch is locked!!!

I just purchased a new apple watch SE with cellular from Costco as a Christmas gift for my daughter. The device is brand new and still in the packaging. I went to Verizon's Website to add a new device and upon inputting the IMEI number, the website says "Your device must be unlocked in order to connect to the Verizon network. To check if it's unlocked, call your current carrier."

I started a chat with Verizon, and the customer care agent told me the exact same thing. I explained that the device is new and has never been on another carrier. still no solution.

What is the deal? Do I need to pair the watch before activating it? It was my understanding that apple watches are not carrier locked, so how is this even a thing? i feel like im going to get roped into buying the watch from Verizon and that will make me just walk away from the purchase and get my daughter something else. Help Please!