Acquiring used books and selling them as new. (Obviously, its not out of thin air, but that's not at all required for the problem.) That's at least one way.

> "Not a single cent goes to the publisher" can only be true if they are selling illegal copies printed somewhere else, which I imagine would be extremely easy to spot.

By whom? It might be easy to spot that it was a lower quality work if you compared it to the genuine article, but that doesn't really tell you that its a counterfeit vs. a problem somewhere in the legitimate supply chain that resulted in a low-quality run. Without a genuine article to compare against, there's no way to distinguish it at all from the publisher just doing low quality work to cut costs.

> "slightly used" books, the publisher and author have already been paid

They haven't been paid for each copy that was sold to the end purchaser as "new"; both the end purchaser (who isn't getting what they paid for) and the publisher (who isn't getting their share of the transaction the end purchaser intended to make) are victims.