iphone water damage without coming in contact with water or moisture

There are many cases with differing levels of protection.

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Don't give up with customer support yet. My son's iPhone had issues that led me to make a call to applecare. They sent out a replacement immediately, but then tried to bill me $200 when they received my son's phone in the replacement mail. They claimed it showed "water damage". It took me nearly an hour and maybe three or four layers of support staff before I was connected with a "customer relations" supervisor who, while he said it was "probable" that the phone had been exposed to water, it was "possible" that the sensor had been tripped before I had picked it up from the AT&T store. They didn't bill me for anything. I consider myself lucky that I was able to make a convincing case. So, don't let the first (or second or third) person you talk to at Apple turn you down. Good luck!

Well I have a short story to tell. I had the exact problem with my 3G. I tried to download the latest 3.0 update and it did the Sync just fine but when it went to download the update the phone froze up and also locked up the computer. We tried to RESTORE the phone but all I ever got was a USB indicator and an iTunes logo on the screen. Finally I called Apple Support and they said to send in the phone or take it to an Apple Store to get it Restored. I choose to take it 40 miles to the Store and immediately they got out their little magnifier and looked in the ports and told me that the phone had been dropped in water---This phone has never been wet ! ---We asked for the manager and he had the same lame story that we had ruined the phone by getting it wet and the phone needed replaced but not under warranty as the warranty did not cover water damage. When I informed him that it was not water damaged and the problem occurred during a program update he basically called me a lier and said everybody tells them the same story. I asked the manager to at least try to reset the phone as I felt there was no water damage and he refused as he said it would ruin their computer. We called Apple support again and spent 2 hours on the phone as she had me remove and re-install iTunes and other settings to no avail and she told me to take the phone to an Apple store. A couple days later my girlfriend took the phone to an Apple store and sweet talked the Genius into RESTORING the phone without looking at the moisture indicators [both were pink] The phone restored perfectly and she was out the door in 15 minutes with a perfect working phone. We now are on record that we have an operational phone regardless of what color the moisture indicators are. This phone was a replacement for the original new one as it crapped out early after purchase and it probably had pink indicators when we got it. This is a great marketing scheme on Apples part to get current customers to purchase new phones and then use these same [faulty]phones for replacements for under warranty phones. This issue is rampid on the web it would behoove Apple to change their policy. At least they should install the indicators in a place that a sweat droplet will not trigger the indicators like other phones where they are in the battery compartment. I wasted way too much time on this issue and have placed an edict at my company not to purchase iphones anymore. i love the phone but do not have to live with Apples policy.