It seems silly for any company to say that they can stop "any and all cases of fraud". That's just impossible. If they had a mechanism to prevent all fraud, it would be worth billions of dollars (assuming it could be applied to payment processors).
Agreed. For me the issue here seems to be more around their handling of the issue. The new wording of their policy seems more sane/better to me. But they need to address the issue in an open manner ASAP.