Just a couple observations and questions to help FIRE me better understand and to perhaps temper the outrage from some of the other posters.
1) You stated:
The S5, in my opinion, is the last good Galaxy phone. Conveniently replaceable battery, cheap and swappable MicroSD storage, and water resistant to boot.
Correct me if I'm wrong, but I don't believe the standard S5 has an actual surviving IP rating (though they marketed it to be water resistant on launch - and frequently failed), but the S5 Active does have a legit IP67 rating. For clarity sake, are we talking bog standard S5 or S5 Active, here?
If we're talking S5 Active, the price seems reasonable to me even for a full refurb. If not, there's still a couple other questions worth asking.
2) What carrier was the phone branded to, and was it advertised as carrier unlocked?
This too, is an important question. If it was NIB old overstock from AT&T or T-Mobile (or other) and sold carrier unlocked, that means that the box technically had to be opened, the phone turned on, the device carrier unlocked and tested. From a strictly legal standpoint, once the seal has been busted from the factory, a phone can no longer technically be sold as "factory new", and even if nothing was done to it or it was barely touched or simply touched for the sake of a function change, the device firmly enters into "open box" or "refurbished" territory.
If the device was carrier unlocked, this too can justify a higher price discrepancy over locked devices, and the price is still reasonably in line.
Additionally, if the device was carrier unlocked, but originally sold as carrier locked, the unlocking process technically throws it into "refurbished" territory legally. This tips that particular hat:
The seller answered and says that the unit I got was new and never used. He said they buy large closeout lots (obviously true), but since the stock is old, they open each box, remove the protective plastic from the screen, test each device, update the software, re-box it and then ship it.
He says that the “R2 ready for reuse” sticker is purely an internal sticker that they use so that they know who tested the phone, and that the phone is new and not refurbished.
This process of aftermarket unlocking would definitely void the factory warranty (I'm guessing no factory warranty was advertised and included, right?) and would require registering the IMEI as refurbished stock, and some bulk new-old-stock devices usually get the serial numbers flagged as refurb as well as part of the reduced pricing to liquidate inventory without the manufacturer taking a financial hit on warranty work. Fortunately, it sounds like the seller was nice enough to do more than just unlock the devices (if that was part of the deal) but bring them current on firmware to boot and adhere to R2 standards in their testing. Good on them.
As has been pointed out by Bacchi, R2 is a refurbishing standard. However, I'm not going to ascribe malice and vulgarities where ignorance and spirit is sufficient to explain the situation.
Although the seller's representative who handles listings/feedback might not be aware of or is treading a dangerous line on legal definitions of "new" and "refurbished", ignorance of a new employee could account for this and the explanation (remember, the seller had 100k+ sales on Ebay alone) or they were trying to assuage fears of more technically ignorant buyers without writing a wall of text like I am. In a sort of philosophical spirit, the phone would be new in that it was never "used", but it is no longer factory new. They broke the seal, they may have carrier unlocked the phone, and they definitely brought the firmware current and tested the device for basic functionality. That requires "using" the device. So, yes, refurb with chain of custody technically and not factory new... and without seeing or reading the listing myself, I don't know how far over the potential legal line they may have inadvertently tap-danced over and that point could be problematic from not just a legal standpoint, but an ethical one as well. However, it could very easily be "factory new with only the changes and testing performed" refurbished, and not actually "this device was used, had a defect, was repaired and sold as new" refurbished. I suspect the first situation and not the second. In that spirit, it is new, but it is also refurbished due to the liquidation supply chain and any device changes made.
Might this help clarify?