Well, very technically speaking, they did recycle those iPhones. Why is Apples so obsessed with controlling the entirety of their devices' life cycle, anyway?
Lets say you buy one of these recycled phones that Apple has already deemed unfixable. Maybe it mostly works, but the screen occasionally blacks out or there's a bunch of dead pixels. Maybe the battery dies almost immediately. It's Apple's reputation that gets tarnished by this.
For example you could start by banning the sale of all used cars.