Apple denied my wife's iPhone 7 repair due to "unauthorized modifications"

Yes, you got scammed.

There is no such thing as a "new" iPhone for sale on eBay. Since there are no authorized sellers of the iPhone on eBay at all, EVERY iPhone sold there is by definition, used. Just like cars.

You can go into a dealer, have the cash, and get the title to the car. Before you even get into it and start the engine for the first time since it came off the truck, it is by definition, "used".

Now complicate that with the fact that you have no way of knowing the history of the phone you bought and what may or may not have been done to it... You see where I'm going with this...

If it's not too late, file a claim with eBay and get your money back.

Apple typically refuses to perform any service at all on devices that have been tampered with, which is why you were not offered the opportunity to pay for the repair.

No real way to know without physically inspecting it. However, there are common 3rd party repairs such as screen repairs, battery replacements, Lightning port replacements, etc. that would be easy to spot upon disassembly. When that happens, Apple specifically requests that they be disclosed by the customer, and whether or not they perform any repair/replacement seems to be taken on a case by case basis.

Apple has two terms for non-warranty repair - for retail Apple Stores and all other service methods (including by mail). These would be the terms that would apply to you:

Legal - Repair Terms and Conditions - Apple

1.8 Service Exclusions and Diagnostic Fee. Apple may charge you a diagnostic fee (including shipping charges) as described in the Country Variation table, below (“Diagnostic Fee”), if Apple inspects your product and determines that (i) your product does not require service, (ii) your product has failed due to or has incompatibilities with software or data residing or recorded on your product (iii) service is required due to the failure of parts that are neither supplied by Apple nor Apple-branded, (iii) additional labor or parts are required that were not specified in the original estimated charges and you do not agree to authorize service based on Apple’s revised estimated charges, or (iv) service cannot be performed because the serial number has been altered, defaced or removed or the product has failed due to accident, abuse, liquid spill or submersion, neglect, misuse (including faulty installation, repair, or maintenance by anyone other than Apple or an Apple Authorized Service Provider), unauthorized modification, extreme environment (including extreme temperature or humidity), extreme physical or electrical stress or interference, fluctuation or surges of electrical power, lightning, static electricity, fire, acts of God or other external causes (“Service Exclusions”). Apple will return your product to you without servicing it and may charge you the Diagnostic Fee.

1.11.6 Disclosure of Unauthorized Modifications. During the service ordering process, you must notify Apple of any unauthorized modifications, or any repairs or replacements not performed by Apple or an Apple Authorized Service Provider (“AASP”), that have been made to your product. Apple will not be responsible for any damage to the product that occurs during the repair process that is a result of any unauthorized modifications or repairs or replacements not performed by Apple or an AASP. If damage results, Apple will seek your authorization for any additional costs for completing service even if the product is covered by warranty or an AppleCare service plan. If you decline authorization, Apple may return your product unrepaired in the damaged condition without any responsibility.

ImJustAHeroForFun wrote:

I’ve never opened up an iPhone before so I guess it’s time to watch some videos. The biggest issue that I’ve heard of when replacing the logic board is that TouchID will no longer work due to the home button being paired to the board at the factory.

I'm not suggesting that you perform the repair yourself. There might not be any way to know directly by yourself, but there might be some ways via a standard Apple diagnostic (which I forgot was another way to detect an "unauthorized" part or repair. Some people have reported that a service was declined because the diagnostic detected a 3rd party component was installed.

ImJustAHeroForFun wrote:

At this point I don’t exactly have anything to lose as it’s currently a $500 paperweight.

You might try finding a 3rd party repair shop that will do it rather than try opening it up yourself. It's unlikely that you would be able to fix a no service issue without a lot of equipment and training to detect the issue. It's not going to be something simple that you could fix like a loose connection.

This is a user to user support forum.

Apple is not here and does not read or respond to any posts here.

No one here has any idea what or why anything happened with your repair.

Best guess since you bought it used, the owner had something replaced by a non-Apple repair facility.

ImJustAHeroForFun wrote:

I understand that Apple doesn’t monitor or respond here. I was more or less curious if anyone else had ran into this before. I hadn’t thought about the previous owner having something replaced by a 3rd party since it was listed as brand new. Chances are I got scammed.

You wouldn't be the first person to have been sold a device that was used/repaired then resold as "new".

The warning about Apple is pretty much my standard boilerplate response since many people believe they are addressing official Apple support.

I can't say whether you were scammed or not.

Only thing I can suggest to try and get an answer is ask Apple support.

Maybe they can access notes by the technician.

https://support.apple.com/contact