Why Amazon and not the people committing the fraud? I don't know why so many people think private companies should be doing the job of the government. Unless you want Amazon to completely get rid of 3rd party sellers.
I support legal action against the companies selling the products too, but they tend to disappear and reappear under different names, and are likely all located in China, which I assume makes prosecution more difficult.
Responding to your edit: this is not "private companies doing the job of the government." If there are fraud and/or consumer protection laws on the books, then companies need to follow them, and they need to face legal consequences when they don't.