[Tenney]

So let's say Wrong Item received, and the item that I've received instead of it has started fire and I have had to instantly dispose of it for healthy & safety purposes?

If that's the case, then you don't need to use the wrong Item received method.

Simply say that the "IPhone" caught fire. And yes, due to overheating, they can catch fire/explode.

What does this mean? Should I plan for boxing them now or what is to be expected? Thank you!

Sounds pretty standard so far. You gave them a story, a "higher level team" needs to investigate since the item is probably in the $1000 range. Know your story and be confident here in the future and you should be good into the next call / chat.