After all that, it turns out you the method of obtaining a free
Watch wasn't a loophole but cruel fraud. What a load of bollocks.

The difference is that I have done nothing illegal. I have not deprived them of property. My watch is actually defective so I didn't lie and say it was broken, for the purpose of obtaining a new unit (insurance fraud). I have 10 days to send back the defective unit, and I'm still within those 10 days. I have not canceled my debit card, and I have not closed my account. I noticed that this process could be exploited, and notified Apple. Nowhere did I say that I exploited the process. I notified Apple as soon as I realized it could be done, and I shipped the defective watch back this morning. But if you want to call the Internet Police, go for it.What's stopping them are laws which make this behavior a crime, usually a class III felony. You have committed fraud. Nothing more. Just because you say "I'm not out to commit fraud" doesn't mean you haven't. You have. And posted it to a public forum. There's nothing to exploit. If you don't believe me, just try to execute your "flaw" and we'll see how that works out for you.
To take a relevant example, I too noticed a "flaw" in most retail stores. You can personally pickup merchandise, and walk out the door without paying. (Or maybe you're clever, and conceal the merchandise before you walk out the door.) That's not a "flaw", that's shoplifting, aka theft. No different here.
Most of you are missing the point. The pre-auth was removed, and he had two watches in hand. It wasn't pending (which negates the restaurant example above).
Explain to me how the merchant can collect funds if the account is closed, rather than a new card being issued? I get that its fun to flame, but the reality is, it was a loophole and he did the right thing. Bravo for that.