Repeatedly buying with the intention of returning would obviously be unethical, wasteful, and a generally shoddy thing to do, but it's certainly not fraud. You buy subject to Apple's sales policies and applicable local laws. In most regions you always have a right to return for faulty or not as described goods, but generally speaking buyer's remorse returns are a goodwill gesture under Apple's sales policy, rather than a law. As such, that goodwill gesture can be revoked if you fail to keep your end of the bargain, for example by abusing it (as the terms and conditions state). In reality you'd have to do this a lot for a company of Apple's size to notice or care, but if you did go about repeatedly returning you can bet your payment card and/or shipping address will get blacklisted eventually.
I'm not sure why a couple of posters here are branding it fraud - if the policy was different and, for example, you could only return faulty items, and you lied to get a return that way, then sure we are heading down those lines. But the simple act of buying a product with the intention of returning is not a breach of Apple sales policies. Doing it repeatedly would be, but again the worst penalty is Apple blacklisting you (which they are perfectly entitled to do at any time anyway for a good reason) rather than being punished for 'fraud'.
As for what happens to returned items: it depends what it is.
iOS devices will be sent to a service centre to be disassembled and the parts reused. Some parts won't be reused, and will instead be recycled, for example glass and metal enclosures. Re-used parts and new parts are combined to manufacture new devices which are then used as AppleCare replacements and sold as refurbs. It used to be the case that Apple public stated that refurbished iOS devices had a new screen, enclosure, and battery, which would lead you to believe that these components are disposed of/recycled from returned devices rather than reused. Apple's position on this today is less clear, however.
Macs aren't automatically disassembled like iOS devices are. Instead they are tested for faults, repaired, and then re-sold as refurbs.
The same applies to large accessories.
Small accessories are generally recycled/disposed of.
I'm not sure why a couple of posters here are branding it fraud - if the policy was different and, for example, you could only return faulty items, and you lied to get a return that way, then sure we are heading down those lines. But the simple act of buying a product with the intention of returning is not a breach of Apple sales policies. Doing it repeatedly would be, but again the worst penalty is Apple blacklisting you (which they are perfectly entitled to do at any time anyway for a good reason) rather than being punished for 'fraud'.
As for what happens to returned items: it depends what it is.
iOS devices will be sent to a service centre to be disassembled and the parts reused. Some parts won't be reused, and will instead be recycled, for example glass and metal enclosures. Re-used parts and new parts are combined to manufacture new devices which are then used as AppleCare replacements and sold as refurbs. It used to be the case that Apple public stated that refurbished iOS devices had a new screen, enclosure, and battery, which would lead you to believe that these components are disposed of/recycled from returned devices rather than reused. Apple's position on this today is less clear, however.
Macs aren't automatically disassembled like iOS devices are. Instead they are tested for faults, repaired, and then re-sold as refurbs.
The same applies to large accessories.
Small accessories are generally recycled/disposed of.