They can do this because they keep the system working, by weeding out scammers and people that don't play by the rules.
But sometimes the rules seem a bit draconian. For instance it seems they tend to act first, notify later - following the guilty until proven innocent doctrine instead of the other way around.
I found an example of Trade Me closing accounts during the weekend in our Geekzone forums. Brad Stewart, one of our moderators (whom I have met a few times before and the team vouche for him) had his account terminated, apparently because he was running more than one account, which is not allowed.
Brad denies running multiple acconts.
He points out that he had some auctions running, a few past the reserve already, which are now ruined.
He actually had just recharged his account, and one poster asked what happened to Brad's money? Would have wound up on someone else's (unknown) account after this "consolidation"?
So what's the rule here? Fire first, ask questions later? Disrupt the users?
I am not in a position to say which side is correct, but it would be a bit easier to understand if a more user friendly process was followed. Something like asking questions first?
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