The scammers will also end up with lots of defects so they'll be brought to account, but if we didn't have a defect system they'd continue to get away with it.  Is that what you want - do away with the defect system so they can continue on their merry way?

No, I don't think anyone here wants that.

The issue here for me is the punishment.. does it fit the offence?

Permanent ban for:

1. OP in cancelling items out of stock.. contravenes policy.... buyers are contacted by this seller and given choice of refund or wait... no buyers have been ripped off. They will receive a refund or their item (delayed delivery).

2. Scammer/fraudsters who can rip a group of  buyers off for $1000's in one hit.