It's entirely possible that a hack/fraud like this existed at a relatively small scale that was 'tolerable' to the business, but subsequently became more popular to the extent it became unsustainable to continue to offer the guarantee.
I could easily image that happening a couple of ways -
* a 'life hack' like mentioned gets spread around in forums/online, raising awareness of the 'hack' which sees return volumes increase beyond what they had modelled/expected when pricing the cost of the guarantee into their product
* The above, combined with the growth in peer-to-peer used clothing sales (things like Vinted in the UK, or ThreadUp? in the US) means there's money to be made taking advantage of things like this - people could absolutely earn a living/earn money finding used clothes in thrift stores, cashing in on the manufacturer guarantee and then reselling the subsequent items on via peer-to-peer sales as unused/unwanted clothing where they'd undoubtedly make a sizeable mark-up vs. the cost of buying potentially quite used clothing in a thrift-store.
On that second point - I personally know people who supplement their modest incomes by doing similar things - scouring things like Facebook marketplace/freecycle for items they know they can turn around and resell online for a small profit. Feels like way too much work per £/$ earned for me, but undoubtedly it happens).
Of course...you could be absolute right, it could just be a convenient scapegoat to point to when removing a previously offered service that the business has deemed no longer viable/not worthwhile to offer.