It’s not hard to figure out how this happened. They were probably relying on an exception list that didn’t include this particular spelling.
I look for “THAT” word and spelling in the dictionary. It isn’t there at all. No exception list would contain that random mispelling of FIVE randomly generated letters.
Yes, they owed her an apology, but, frankly, I have been given randomly generated TEMP passwords that could be pronounced as something we wouldn’t like to hear.