Thank you. I will call them back.

FWIW this was the conversation. Maybe she meant that if you upgrade from coach to biz (rather than buying biz initially), you don't get the free baggage? It's not very clear.

Me: "On the outbound I paid for seat selection and baggage. If I upgrade to Business, will those fees be credited back since they are free services in Business Class?"
Chat Agent: "When upgrading, the checked baggage allowance isn't impacted so that can still be used. The seat reservation can be refunded, you will need to chat us back after the upgrade has been processed for us to initiate the refund of the seat."