This is not a shock to me. This encouraged abusive returns and Amazon is all about cutting down on return costs at the moment.
Maybe it’s just me being a little green, thing, but I hate clothes shopping in general. The thought of ordering a bunch of clothes to try on, eww, lol
Bingo, even though they say it’s because their size charts are better 
I do not think it is return abuse which motivated this. I believe it is cost and only cost.
At a retail clothing store, employees steam and refold clothing during down time when there are no customers.
In Amazon FC there is no down time. The returns put a strain on the fulfillment operations.
It was a dumb idea, probably proposed by someone who never entered an FC.
Agreed - especially if the seller hasn’t opted into the FBA repackaging and refurbishment services (link, SHC) Program purporting to do the same (emphasis mine):
Or, mayhaps, even if they have opted in, as I would think it likely that Amazon has a limited number of facilities capable of providing such services - which, if indeed that’s the case, might well entail additional transportation/labor costs between a Returns-handling Facility and one dedicated to Refurbishment-handling.