Apple previously did not accept water damaged iPhones for trade-ins, but it has now slightly relaxed the previous restrictions.
Previously, Apple used to flat out deny accepting an iPhone that had been water damaged. When the customer brought it in the store for repair, the employees would look at the liquid contact indicators to see if the device had any water damage. If the indicator was positive, they wouldn’t accept the device. Liquid contact indicators are basically stickers that change color when they come in contact with any liquid. iPhones with the indicators showing a positive reading would be deemed worthless and Apple wouldn’t trade it in and offer the customer a new model.
The company has confirmed that it will no longer immediately reject iPhones that have their liquid contact indicators showing a positive reading. Apple will start accepting those devices under its “Reuse and Recycle” program, thus allowing a substantial number of customers to trade-in their existing iPhone for a new one.
However, its not like Apple will accept units that have severe water damage. Even if the iPhone shows signs that its corroding or if there’s water underneath the display, Apple won’t take the device for a trade-in.
Source: The Verge