It is part of the T&Cs you agreed to when you joined and participate in WoH ...
"If a Member cancels an Award Reservation in compliance with the applicable hotel’s or resort’s cancellation policy, any corresponding points that have been deducted from the Member’s account (or the applicable award) will be returned to the account within approximately three (3) days of the cancellation. If a Member does not follow the proper cancellation policy for the applicable hotel or resort or if a Member does not check into the hotel or resort when scheduled, the credit card provided with the Award Reservation will be charged the Standard Rate then being offered by that hotel or resort on the date charged in accordance with the hotel’s or resort’s cancellation or no-show policy and any points/award redeemed for the applicable Award Reservation will be returned to the Member’s account, except that – if for any reason the credit card provided with the Award Reservation cannot be charged – Hyatt reserves the right, in its sole discretion, to (a) attempt to charge any other payment method we have on file for such Member and/or (b) retain (or deduct from the Member’s account) the points or award redeemed for the applicable Award Reservation."
Thanks, I was not aware of this language, that seems pretty clear. Except for the fact that it does not say anywhere that the reservation is not
cancellable, and that hyatt.com allows it to be cancelled, so I'm not sure how this could be considered outside of the cancellation policy.