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As mentioned, Valve did temp VAC bans at first but found that it was just the same cheaters over and over and over again.
So no, this would not solve the cheating problem, if something like this would have solved the cheating issue, it would have been solved decades ago. This has never solved the cheating issue in ANY game on any service no matter who owns it.
There is no solving the cheating problem so that it goes away. There is mitigating it so that it doesn't seem as bad, but requires every server to have active admins on all the time to get rid of the trouble makers as soon as they are seen.
I've been an admin to servers people liked to play on because we kept the cheaters and trouble makers at bay. We could never stop them, but we made it hard for them to do anything there for long. We didn't even have admins on the servers all day, but we did make sure that people knew we could be reached, and usually within minutes we could have an admin jump on the server, usually undercover to view the person doing what they were doing and then kick/ban them.
The other things that would help reduce (but not get rid of) cheating is getting rid of the items you can get while playing (basically get rid of trading and the marketplace) and making the game cost 50+ dollars with no discounts on it ever. Again this won't stop cheaters, but it will slow them as there has been computer game cheaters since the dawn of computer games and at least some cheaters have money they don't care about and will just keep rebuying the game. Today we see many cheaters who only have 1 game on their accounts and if caught, make a whole new account and rebuy the game to cheat.
Also before being said, no hardware ID and IP bans will not work, both can be changed in seconds, it also means banning innocent people who might be on the same network or using the same computer.
Very invasive DRM/anti-cheat software will also not work. A number of other games use invasive software like that run when you start up your computer, so its running all the time and even that has not stopped cheaters. Invasive software can also cause other issues along with false positives.
Basically any anti-cheater method you can think of has either already been tried or is too expensive to try (and will still fail) or in some cases might actually be illegal due to certain laws in a country.
Again, there is no solving the cheating problem, there is only mitigating it, and that requires active admins for a game server to either be there watching it or be able to jump on quickly to take care of things.
If a cheater would still be cheating after a ban, what makes you think they would stop after a warning? It only means they would be able to cheat more.
Also cheaters use burner accounts that only have that one game on that they cheat on.
The ones that have a lot of games often comes from it being hijacked in some way.
It also wouldn't stop the cheating. There is no silver bullet against cheating, the problem is with human nature, not the games/anti-cheats.
From my PoV, it would stop the cheating in PvP, unless the cheaters want to have 100 accounts and 100 telephone numbers.
This should be combined with the possibility to appeal the ban where your appeal is reviewed by a third party.
Weird thing, I have been playing games for 30+ years, have been using cracked games a LOT in my youth and still I have never lost my account. But still, if you account was hacked and the cheater played from another location then the ban can be overturned with the notification that the second time that happens there will be no appeal and to avoid that using a 2 steps authenticator is recommended.
Human nature is one where coercion is needed, you don't solve anything without it. In my youth if you disrespected a teacher (like you see today) I knew I would get smacked firstly by the teacher, then by the principal then by both of my parents once at school and once at home.
The same for the ones stealing from stores, in the past it was a clear punishment, you steal, you do time, regardless of nationality, now it's if you steal under XXX $ you are not prosecuted or if you steal above XXX $ and you find a "good hearten judge" you get set free .... guess what people keep doing the bad stuff.
Fix the human primal predilection of seeking an advantage at any cost first. Then you can combat cheating for good.
Bans should be permanent on the first offense. Like it is now.
Guess one possible solution is when we will all have one digital ID that can't be easily stolen, or the criminal/penal repercussions would be too heavy to do so for gaming.
Well, the solution might be something like the twitter "authenticated account", you authenticate your account with an ID, phone no, authenticator and so on until you get that badge. Once you have it you get an option to play only with authenticated accounts, I can bet on anything that almost everyone would go for it. The cheaters can play with each-other.
No, not all bans can be appealed or overturned. And everybody can accidentally do a mishap. that you or I haven't lost an account means absolutely nothing in this.
Excessive coercion as you propose is unneeded. False analogies don't change that.
So no, people should not be punished outside the game they cheated in. No matter the mental gymnastics people want to pull.
Hell to the no.