Fraudulent bit donations and their impact on streamers
My idea to stop fraudulent bits and their impact on streamers is twofold: 1) Create a system or process that listens and supports streamers impacted by the complete removal of cheering for channels triggered by fraudulent bit donations. 2) Emphasize assessing security behind the bit donating process/software rather than punishing streamers who have received these bits from users taking advantage of this obviously weak security flaw.
Fraudulent bits are obviously a large problem for Twitch as a business; however, more importantly, these faux donations are a larger problem for streamers: the financial backbone and foundation of Twitch.
Currently, Twitch has an unclear and nonexistent communication process for streamers who have unknowingly received fraudulent bits and have, therefore, had this gifting option completely wiped from affected channels. Viewers can no longer financially support streamers who have been impacted this way. Streamers can no longer receive a substantial portion of their income. And finally, Twitch is negatively affected by this. If Twitch has no clear system on how to help these specific streamers, then they lose a large part of what makes communities so vital: camaraderie. Listen to streamers, strengthen communities, grow Twitch. That's all.

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DoctorGoat_ commented
My channel has been hit by fraudulent bits and i've been trying to reach out to them since October. Every time I get a reply back telling me 'there has been fraudulent activity on your account so your payout has been suspended'
They sent me something new recently saying I have to wait 30 days before I can appeal again.
This is very unfair for the smaller streamer as we do not have anyone to talk to so we can get this sorted, no way to really prove we have no involvement or have any power or control over this fraudulent activity.
The ability to decline bit donations or refund them to avoid suspicious donations in the future would be so helpful.This is such a common problem that so many people are struggling to get sorted with zero results.