The people who get punished here are the tourists and people who are new to town. If you're new and don't know the rules, or you don't speak English natively, it might be hard to argue against some yellow cabbie who suddenly shakes his head and mumbles and points out the window while you're anxiously trying to get a cab for the second or first time in your life.

Also if you report them they do have a GPS tracker that can validate their location - supposedly, or so I'm told, TLC will take that seriously and 3 dings against the driver will trigger some sort of penalty.