There was a scandal years ago because the moisture indicators were found to be wildly over-sensitive, and changing colour in inappropriate situations, e.g. it being a bit humid because it was raining, being in someone’s pocket when their clothes were a little too warm so they sweated, or having been brought into a bathroom within a couple of hours of someone showing. Some were already showing water damage immediately after leaving the Apple Store when journalists investigated.

If the Genius Bar staff are told the water damage indicators indicate water damage, then they don’t have to lie to say they can’t repair a phone. If some percentage of phones have indicators that simply don’t work correctly, then people will have repairs rejected when they know their phone’s never been near water, so it’ll look like the staff are lying.

The situation must have improved because this was headline news years ago and I’ve not seen it mentioned since, but even if it’s a fixed problem, it still gave Apple a reputation for refusing to do repairs for nonsensical reasons.