Those people at the dealer are a bunch of fools. The Performance Center installed my hitch and the only thing they did to the bumper was to get some wax residue on it from detailing carelessly. 30 minutes later, good as new. I would report SF BMW to the BBB if I was you.

Plus, they overcharged you $500 bucks on the hirch anyway. That profit would have paid for the new bumper.