UA's policy is clear: assuming this was an economy class ticket, the passenger was not entitled to your luggage allowance just because the miles came from your account. There is fine print on the receipt that says that the traveler needs status in order to get the baggage charges waived. That said, DOT regulations require that UA print the correct information on the receipt. While the old receipt format was probably technically compliant -- the correct value was printed on the receipt, crossed out, and replaced with $0 and then disclaimer -- the new receipt format does not comply with the law. The correct baggage charges are not listed, even in a misleading way; you'd have to go to the website to find them.

I suggest asking UA for a refund based upon the receipt. When they decline, file a consumer complaint with the DOT here: https://www.transportation.gov/airco...umer-complaint . It only takes a few minutes, and (a) it will get the complaint sent to someone at UA who's specifically tasked with regulatory compliance, and (b) it'll help get this issue on the DOT's radar.