Apple is pretty bad about this, as per the recently-reported story of Apple revoking a user's access to literally all of his apple hardware and email account because he bought a gift card that someone else had compromised. That's quite a lot worse since people depend on their apple devices much more than on a simple game console.
Google is bad about this too. They will disable your email accounts based on their automated policy violation detection and even though they, in theory, give you a way to get human review, reported cases show that they are notorious for showing no mercy even when you did was innocent and legal (but just has the appearance of risk). They feel justified in this since their services are free to you, but people get very dependent on their emails and a ban can be very life-wrecking.
In the case of apple and Nintendo, they very deliberately protect themselves from criminal harm by deflecting victimization on to their own users instead. Like in the apple case: if you are the victim of fraud (buying a compromised gift card), Apple shuts YOU down, rather than eating the financial loss themselves. And with Nintendo, if you innocently bought a legit used game, but it turns out the previous owner illegally duplicated it, Nintendo shuts YOU down, rather than eating the cost of copyright infringement.
In the very specific case of hardware mods, I can see a justification of denying online use in order to protect players from OTHER players who cheat. Especially in PVP games, people obviously hate cheaters because they ruin the game for everyone, so they are happy to accept control measures that can detect cheaters and shut them down. HOWEVER, even in this case, a permanent account ban is WAY too heavy handed. The obvious reasonable balance is that you are banned so long as your device remains detectably compromised. Once you clean the device up, you should be allowed to play again. MAYBE a perma-ban from online games would be justified for repeat offenders, but only after they have received and acknowledged several warnings to this effect.
Shutting a player down the instant a copied key is detected is outright egregious, as it punishes the victim without proof of guilt (not to mention bypasses any pretension of legal due process). Nintendo doesn't care, of course, because their products are desirable enough (and there is too little competition in the industry realistically), that they can just get away with this. People will put up with this abuse to play Nintendo exclusives. Same for Apple.
The wealthy abuse us because we tolerate it and keep giving them our money. And also because there are too few big-tech companies, creating an effective cartel, leaving us with no-where else to turn (realistically, even if there are theoretical alternatives that come with unwanted sacrifice, cost, or risk, above-and-beyond).