“What exaxctly does "pre-owned" mean? Does it mean it is used? Like buying a phone on a yard sale? Or does it mean it was used, not liked, returned and then maybe repaired and re-certified by Apple? How can something be both "pre-owned" and "new"?”
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Yes, pre-owned means it has been used before. No, it is not new, it can be like new but it is not because it is "Pre-Owned."
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