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The individual frauds must be prosecuted. but putting a ban on the whole country or a lot of countires !!!!!
I agree: Banning on the basis of country TLDs is a very bad solution. While this is certainly an easy way to cut down on frauds it sure is discriminating.
Business logic might dictate to go for the easiest, most cost effective solution. In the case of a selling site this is not too problematic - the overwhelming majority of online shops don't operate globally anyway.
For companies acting in theory on a global scale, like search engines, this is a bit different.
Any site that sees and prides itself to serve the world wide web should be ultra careful to ban users on the basis of nationality.
It should be added that this kind of behaviour is definately totally contra productive to any efforts to bridge the digital divides, a goal that in turn the world wide economy could only profit from.