Not breaking news, but this is the first I have heard of it. In November of 2007 it was discovered that some stretchable hair bands manufactured in China were assembled by wrapping fuzzy material around recycled condoms. Although there are rumors that the condoms were "used," current evidence suggests that the manufacturer was repurposing newly-manufactured condoms that failed quality standards applicable to their original purpose.
More information and additional photos at Snopes.
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