So they’ll donate it to someone who will then destroy it.

As the recipient of that donation, why would I actually destroy it when I can sell it?

Selling clothes is hard and annoying and most people can't be bothered. I've had to dispose of a number of clothes, and not once have I sold them; I think a slight majority ended up in the garbage, with a few turning into rags and a decent number landing in a donation bin when I lived in a building with one.

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Because that's what you agreed to, that's why they donated it to you.

Then that's not a donation, just some shenanigans to bypass the law, which regulators presumably understands could happen.

Welcome to Planet Earth in 2026 :)