[Emu]

They don't have to check. Here's how it goes.

You sell your X-Box for however much in store credit and buy another system or a game. An X-Box would go for what, maybe 20 bucks? I've never sold a system so I don't know.

Generally when people bring in things for trade in it's because they want something expensive. A new game or a new system. So you use that credit for your new system, and they've just made a sale.

Meanwhile they sell the broken X-Box to some schmuck or some doting grandmother who doesn't know any better. They bring it back and get the typical "Oh no we can only give you store credit for that." So they still technically make a profit off of selling broken merchandise. So they might have lost 40 dollars worth of X-Boxes, but they made money off of the sale of the game you traded your X-Box for as well as the X-Box itself.