Why are you complaining about American? IMHO, your work colleague should have offered his seat if he wasn't using upgrades. You should be tiffed with your friend and not American. There is no perfect system but you have to rely on humans to do the right thing.

Maybe American will give you the upgrade stickers back but I really think you're angry with the wrong person. Had your colleague offered his seat since it was rightfully yours, you would have been upgraded. It's as simple as that.