I buy a lot of used equipment and I find that well packed means something different to everyone.
A few words of advice for used equipment sellers
A few more words of advice for used equipment sellers
This is just my limited experience but I've had brand new oem re4 drives show up dead from newegg that were individually packed in inflatable air bags designed for hard drives, and then surrounded by more inflatable bags to fill out the box. Not 2/3 of them mind you like 1/12 drives but they were brand new not used at all and I've had used drives shipped in anti-static bags + airfoam show up with like 1:4 ratio dead likely because the boxes get thrown around so much because they were tested before shipping.
That's one reason I refuse to buy drives from Newegg. I don't know if they still use that same packing style, but the style you describes voids WD's warranty on the RE. The only WD-approved packaging methods are the single drive box with plastic end inserts, the 5-drive multi-pack box with foam cutouts, and the 20-drive multi-pack box with molded foam. There is also a 3-drive multi-pack, but I don't think that's in the distribution channel as I've only seen them from the warranty group. Some other WD drives can be shipped in a cardboard plus cling-film clamshell, but not RE's.
I've talked to a number of drive manufacturers about improper packaging by sellers (various, not just Newegg). Unfortunately, the warranty group at manufacturers is in a different profit/loss line than the sale of new drives, so the warranty group doesn't get to "cut off" supply to a non-compliant seller, as much as they'd like to.
HGST does have a diagnostic (HiTest) that checks for handling damage and that is cause for an immediate warranty rejection. So you should
never buy them from a seller that says "return to manufacturer for warranty".
I do think that any time you're buying used/decomm equipment, the buyer has a responsibility to test within a week, maybe 2 at most. I've had stuff sit around for a few months because I was to busy to test it and never bothered to go back to the seller because at that point it's beyond a reasonable DOA timeframe.
We don't know the details of the arrangement between the seller and the buyer in this case. Since the seller says they paid for insurance, they apparently had an expectation that the buyer would check the drives and let them know quickly enough to file an insurance claim if the drives were non-functional.
Regardless of whether they provide a partial / full refund to the customer or tell them "tough luck", they should probably use some labels like these on future orders: