The problem is obviously the same as in many other industries - how do you distinguish honest legitimate players who swear they haven't cheated from people who will say anything to get you to unban them. I don't work in that department personally, but I've seen reports shared internally where the player literally went to local news station to say how unfairly they are treated and how we banned him without any info or any reason and how it's affecting his mental health and his family and he basically made a huge stink around it, and then we pull up the ban report for his account and we clearly see a screenshot from his machine where he's running cheat engine with cheats for our game enabled. Some people will just lie through their teeth to get their way. So you have to rely on what you know with absolute certainty - you detected something that is absolutely indicative of cheating? You ban them. Anything else is a no no. At least where I used to work no one used any kind of algorithm for automatic bans, those were only used for manually reviewed cases where someone would actually watch a replay of your game before issuing a ban.

Does that mean the system is foolproof? No, of course not. But banning honest paying users is a huge risk to any business - so obviously no one wants to do that, every system like this errs on the side of caution by default for that reason alone.

And obvious disclaimer - I can only comment on my own experiences, I have no idea what every company out there is doing.