Of course you're going to get banned for using a game that has been dumped and uploaded online, lol.
I don't think that's obvious to the 99% of users that are not pirates and aren't interested in piracy.
Nor do they have
ANY way to tell if a particular used copy of a game could have been dumped for someone's personal collection they use on their MIG Switch or whatever the case.
And therein lies the problem.
It's a fine line between ethical and unethical when it comes to the means and the lengths a company is willing to go to "prevent" piracy.
And banning a user without being 100% certain that user is guilty crosses the line into unethical, IMO. Once you get banned, there is no unbanning. There are no appeals. Nintendo won't listen to you no matter how much you plead your case and how good your case is. Your console is effectively permanently worthless. Therefore, they
need to be 100% certain. They could settle for 99% if they were willing to listen to ban appeals and have people submit proof of purchase.
This has just become a problem for Nintendo and they have to figure out the best way to deal with it. It's not the user's fault that pirates are ruining it for legitimate users by dumping games and then selling the carts, and it isn't Nintendo's fault either, but how Nintendo chooses to deal with it,
that very much is their responsibility and can affect their public image.
Why we're only seeing this happen now seems pretty clear. Users with a modded Switch (which likely number far more than the number of MIG Switch users) are now looking for a way to carry over everything to the Switch 2 and a lot of them have figured out that the cheapest way (which isn't a guaranteed ban...) is to buy used copies of games, dump them, and resell them, and put all of it on a MIG Switch.
It is also possible that "Virtual Game Card" is providing additional telemetry that makes this a lot easier for Nintendo to detect than it was previously.
As more people (pirates) buy a Switch 2 this problem is just going to get worse. We've only seen the beginning of it.
A better way for Nintendo to handle this would be: If a duplicate cart (cert/headers) is detected on a particular Switch (2) a blacklist could be employed to render the cart useless. Then if the user is a legitimate user and not a pirate they would simply return the game to whoever they bought it from stating that it doesn't work. This would require the user to connect to the Internet somewhat regularly to update the blacklist (at least before the return window closes for the item) but legitimate users typically will keep their console up to date so that isn't a big issue. Used game stores should always check if a game works before they put it out for sale anyway.
Then - before a ban is considered - look at how many occurrences of duplicate carts have been logged on this console. If it's just a couple unique occurrences, they most likely aren't a pirate, but someone who got unlucky in the used game lottery. Pirates don't typically pirate just one or two games.
They could also look at the dates of when the specific cart (cert/headers) was registered on each individual console this cart has been seen on to try to figure out the chain of events and determine how likely it is to be a used game and where in the chain "the deed" (of dumping) most likely occurred, to figure out the actual culprit. But there are ways to game a system like that, so it wouldn't be a perfect indicator.
Not saying this method is perfect but it would remove the vast majority of false positives as well as lead to the people who actually did the deed (of dumping the games) for the most part getting their games returned to them and not being able to resell them, which is how things should be, rather than the burden being put on innocent users who just happen to buy games used.