Fairly simple anti-fraud software. All it has to do is look at various attributes and then weed out those who have booked in violation of the COC.
It all depends on where you sit. Not only does allowing people to hold impossible bookings affect availability, but it also affects pricing. If I book a cheap seat and it's the last one and I don't intend to fly it, that's good for me. But, when you come along, the cheap seats are gone and you are stuck paying more. That's bad for you.