I can say beyond the shadow of a doubt that they send out used merchandise! Back in the day, I bought two D&C alpaca hoodie sweaters--one red and one charcoal. The charcoal one was fine--I still wear it! But after a few wearings, the red one developed a 'crunchy' texture on the front. CS advised me to send it back. But the red one was sold out in my size. A couple of weeks later I was thrilled to see it in stock, and quickly reordered it. Imagine my surprise when I opened the package and found my crunchy sweater had returned to me!
Today one of the hosts on a clothing show talked about a maxi dress from last year. She said after she bought it she wanted another color that was sold out. Said she kept checking to see if someone returned it so she cold buy it.
A couple of weeks ago I received damaged open cosmetics from a department store. Probably a holiday return. I was surprised and don't want to order anything like that from them again.