Repair Site Asking for Passcode

Hello there,

My iPhone 14 screen had severe damages due to a fall, and I took it to an Apple authorized store. At the time of handing the phone over to them, they asked me to disable Find My. They said the passcode will not be required. However, a day later they called asking for the passcode saying that the screen is replaced but the phone is not getting detected on the diagnostic tests run by Apple for Hardware. They said the version needs to be updated hence passcode is needed. I was hesitant and told them that I can come to the shop and then they can do it in front of me. But they pushed me saying it was necessary that they did the test within 2 hours of plugging in the test and that the store is closing etc. I asked them if they guaranteed my privacy and they said yes. Also, they told on call that data might get erased if this test fails. They had not informed me earlier about this before I gave them the phone, else I'd have taken complete backup in some way at least.

Is this alright? Does Apple take the responsibility of privacy in such a case?

Also is there a way to raise a complaint to Apple? The repair centre people did not tell me earlier and did not wait for me to come at the shop. Then also suddenly told me that data might get erased. If I had known, I'd have never submitted the phone to them.