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Blizzard has brought down the banhammer on Diablo 3 cheaters, botters, and exploiters. A day after issuing a warning, they've banned thousands of offending players across the world.
According to Diablo 3's end user license agreement, cheating in any form is grounds for a permanent ban from the game. Because D3 is online-only, that means you can't even play single-player anymore. Because the ban is tied to your Battle.net account, you'd presumably need a new copy of D3 and a new Battle.net account in order to play again.
Blizzard plans to launch the real-money auction house (RMAH) later today. Players will be able to buy and sell items and in-game gold through the RMAH for real world currency. It's pretty vital, then, that they cut down on player cheating as much as they can. If players are walking around with endless stockpiles of gold and equipment due to hacks, that would obviously wreak havoc on the in-game economy. Blizzard will get a cut of all transactions through the RMAH so they have a vested interest in making sure that it runs smoothly.
Not really sure why they decided to notify players of the incoming bans a day in advance. It seems like it's giving gold farming companies an easy way to escape punishment. If I were them, I'd just maintain "clean" accounts that don't utilize hacks in any fashion. Then, I'd trade gold and items from my hacking/exploiting accounts to these clean accounts through a co-op match. Unless Blizzard has a way to track these in-game transactions or restrict them, it seems really easy to launder ill-gotten riches in the game.
The company's also been issuing regular updates to the game to fix loopholes exploited by players. For example, this weekend's round of hotfixes prevented players from turning in the same quests over and over for large rewards. They also lowered the amount of gold that drops from smashed vases; apparently this was a preferred method for players using automated "botting" programs to collect gold.
Ultimately, though, the game was out for nearly a month before Blizzard implemented these changes and made these bans. Individual players and gold farming companies alike have had weeks to exploit the game. I fully expect the RMAH to be a mad house with inflated prices everywhere you turn. Hopefully I'm wrong, though.