Has anyone out there cancelled a point booking with a similarly worded cancellation policy and lost one night's worth of points?
There have been lengthy discussions of this issue in several threads recently. The current Marriott rule is absolutely that they charge a no-show fee, rather than forfeit the points. I think most of us would rather lose the points than pay a hefty fee. Trip insurance only applies in specific, limited circumstances.
Sounds like this GSM comes from the SPG side and is not familiar with the Marriott rules. I suspect ultimately the property could be compelled to follow the published rules, but not sure how much effort that would require. I agree the failure to specify the amount to be charged in event of a no-show is also an issue.