"get them pulled into the legal system once it is flagged, where the process itself is the punishment"

This is the real threat here. Anyone can have data flagged at any time, by accident or maliciously. Like how any video can be flagged for copyright infringement and the creator is 'punished by the process' regardless of guilt/innocence. A possible fix would be to have severe financial punishments for every false claim (lets say a million bucks per instance). Imagine how careful the system would be designed if that were the case, verses the case where there is no punishment for false claims.