It seems like the automated reporting system has been abused for years. Why won't they fix it?

They do.

The check is… “is there a chat violation”.

If there is no violation, there is no problem.

Here is a perfect example of someone claiming they’re getting actioned “for no reason”… with a blue setting the record straight.

Perhaps you should stop taking your friends word at face value, and get them to create a similar thread so you can actually see that the actions taken against their account aren’t “for no reason”, and that the report system isn’t being abused.