Yep, once the little white and red peices of paper get moisture they change color, indicating that the phone has been subjected to water damage, so whenever you turn the phone in for whatever reason it might not be working they'll notice them and say that was the cause.
What I do when I get a new device with them is find the sensors and cover them with electric tape, sometimes you'll have to open it up though.
This one is clean.
This one has been activated.
The HTC ones are different though.