So you defrauded steam and they say "give us the money back and we'll unban your account" and this is "disgusting, and criminal" ?
Really?
So if someone came to your company and bought your products then said "lol taken me money back!!" you wouldn't be taking your property back, or would you be going straight to the police?
How about contacting pay pal and getting them to send the money?
Proof of fraud/intent to commit fraud? mistakes can and do happen, while a company has ever right to take action to prevent fraud and legal action to recover debts they also need to be reasonable about it... steam is not being reasonable.
suspending your account and saying when the paypal dispute is closed and the money returned is unreasonable?
I have spoken to PayPal and they have said they cannot resend the payment.
For a long standing account in previously good standing yes. Nothing wrong with blocking future purchases until the debt is settled or taking legal action if needed/blocking account if the debt isn't settled within a reasonable amount of time.
Its not just that tho, its the lack of options, the paypal situation might be completely out of his hands i.e. steam gifts - there needs to be other ways for him to settle the matter in good faith. Completely blocking a long standing account "irreversibly" due to the limited options for resolving the situation is completely unreasonable.
Except it's a subscription account and costs them bandwidth/money when he uses it.
This is the equivalent of charging back your electricity bill then complaining when they cut your supply off.