iPhone upgrade lost in delivery found after replacement received.

I ordered an 16 Pro max upgrade with AT&T but UPS botched the delivery so I ordered a replacement from AT&T and did receive it. But then a neighbor down the street shows up with the first package that UPS mis-delivered. So I take it over to the nearest AT&T store and the staff there tell me they can’t take it back as it’s been recorded as Lost in delivery. They said I could take it to Apple to return or just keep it as a wifi device (SIM is locked out).

Can I really use it like that or does it belong to Apple? Seems odd…