How quickly did you correct the error? If you made the booking and as soon as you saw the confirmation called to correct the error, I think you should pursue your complaint with the DOT and the Attorney General's office. The company must correct any errors they have made, if you can establish it is their error. If there was a delay in you spotting the error you may have more of a problem.
On the question of being offered coach for a business class fare, what explanation have they offered for this?
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