Money transmitters are still subject to Reg E and oversight.
The truth is these same things happen with regular bank accounts. If you bounce some checks, or you have a "risky" business even without any chargebacks, the bank will ask for more info and then close your account and keep the money until you prove that you aren't someone else that previously defrauded them, a nearly impossible task. The recourse is mostly the same.
There's lots of people who don't do anything wrong and then they just get flagged for whatever reason, and their assets are frozen with no recourse other than "go to arbitration [paid for by the company] and hope they give your money back".
The truth is these same things happen with regular bank accounts. If you bounce some checks, or you have a "risky" business even without any chargebacks, the bank will ask for more info and then close your account and keep the money until you prove that you aren't someone else that previously defrauded them, a nearly impossible task. The recourse is mostly the same.