How can an iPhone 5 under contract be activated?

I recently lost my Verizon iPhone 5, so naturally, I replaced it. However, I happened to come across it some time later, and ended up selling it to someone. They recently contacted me saying that they called Apple and can't activate it because it's under contract. What can I do to help them? They didn't give the details, but could they be trying to activate it with a different carrier's SIM card? If that IS the issue, how can they get around it? I don't want to be responsible for selling someone a phone that they can't use.

How did you replace the phone? If you used insurance, then the old phone belongs to the insurance company.