Product: Debt collection

I received an email from XXXX XXXX, indicating that I had an open collection reported to my credit report on XXXX. I pulled the report to learn that it was a collection from XXXX XXXX XXXX in the amount of {$240.00}. I immediately contacted XXXX XXXX XXXX  because I had no idea that their was even a balance with the company. Of course they could n't provide me any information because the file was already sent to 1st Credit Services. The rep provided me with the phone number and I called immediately to pay the debt in full. I did not take the time to verify this debt because I am set to go to closing on my new home and just wanted to get it taken care of. I spoke with XXXX at 1st Credit Services and let him know that I was making a payment, using my husbands card. I called my husband with XXXX on the phone to get authorization. Once my husband disconnected, I provided the information and the debt was paid. I sent a message to my loan officer to inform him that I received a collections alert, although I never received a letter and paid it in full. I was told that me not receiving written notice was in violation of the Fair Credit Reporting Act and to call them to request that it be removed. I did just that! When I called and spoke with XXXX. I explained to him that I never received a letter and would like for them to remove the collection from my credit report, since they are in violation. I verified my address again! He states that numerous letters were sent to me and returned by the post office. I said " so you are confirming that I never received the letter, on a recorded line ( XXXX XXXX ). With this information can you please remove this? He tells me no and states that the letters were sent back because they have the wrong zip code and that I should have asked for the letter before I paid the debt. I was transferred to his supervisor, XXXX and he told me the same thing. He added that they did their part and it 's not their fault that the information was sent to them incorrectly from the gym. I explained the situation and he said that he will not remove it. I then told XXXX that I would pursue legal action and we disconnected the call. 
I contacted XXXX at XXXX to request copies of the letters that were sent to the wrong address, to be sent to my updated address. He asked that I verify my address, which I did. He first offered to email the letter to me, then I stated that I want all the letters that were returned, with the original dates they were sent to me so I can provide them to my lawyer. I was then transferred to another supervisor. This gentleman states that " They can only send letters once and the address and zip code I verified is what they have had on file the entire time ''. I said, XXXX updated my address today. If the address was correct the whole time, why were my letters returned? The response I received was this " I do n't know, maybe it was a postal issue or more likely, you sent them back because you knew we were trying to collect a debt ''. 
I was livid at this point and told him that it was disrespectful for him to accuse me of sending letters back and that I would be consulting my legal team on this matter.