There's very little point to implement word blacklisting, there are always ways to avoid machine-grade blacklists, and in the end they will always start to filter out also legit messages.
This banning after seems to me so far somewhat effective, there's not *that* many cases yet (if somebody is using bots to advert some fishy webpage on forums, it usually generates lot more spam over few days, than these few sore losers using LFS in game chat).
Of course removing the pirate service completely would be nice, but that's not that simle... if even possible. Some people are simply idiots.
About "paypal knows what they are involved in" ... you mean like daily? Over the world? Jesus, I hope they are not, because they would very likely suicide themselves instantly (not because of LFS, but the other stuff).