For the most part, people care because of how the situation was handled.
Imagine being on Fiverr for years and investing $50K in a professional home recording studio. Then imagine getting an email one day saying you have been banned, without giving you a reason. Then imagine that although it is being implied what you did wrong, this doesn’t make sense to you as up until that moment, you had a manager who was telling you that Fiverr loved you, and were a bit of a star at official meetups. You thought that you were in the clear and being appreciated for helping publicize Fiverr. Then suddenly, "You’re banned! Get out!"
People on the official forum want to focus on how wrong the service Pete offered was. However, the real issue is that Pete was bringing in new customers, all of whom suddenly got told that they would not be receiving what they ordered and couldn’t have their money back. Imagine if that was your first ever experience placing an order with Fiverr.
I bought premium WordPress theme on Envato a while ago. I paid for 12-months premium support and as far as I was aware, my purchase was protected by a 30-day money back guarantee. Sadly, the theme was broken out of the box. Premium support absolutely did not exist. Moreover, whenever I attempted to reach out, I was asked to pay $50 to $150 for someone to fix the theme or cover the cost of additional plugins.
I was furious. I asked the seller for a refund. Then I asked Envato for a refund. Both refused. Then I had to go through the messy business of filing a chargeback. Because of this, I will NEVER buy ANYTHING on Envato again. In fact, whenever Envato pops up in conversation, I feel the need to warn people about going near the place.
I imagine that the 200+ people who had pending orders with Pete on Fiverr felt exactly the same. One then goes to Twitter to complain. Then hundreds of other people realize they are not alone and start asking, “What kind of company acts like this?” Then people find out that Pete was given no warning and that Fiverr banned him and closed down all communication. Then people think again, "What kind of company acts like this?"
Remember, up until this point, it is not about what Pete offered. However, if you want to go down that route, Pete read video scripts which were intended to be used as a joke, where he asked for people to give their credit card numbers. Let’s say for argument’s sake that this was a real attempt by Pete to defraud people. In this case, there is no question that he should have been banned.
Sadly, Fiverr’s bizzare position became one of: "We have removed this service and seller to prevent credit card fraud. However, we will not be refinding any of the $12.5K paid to us for this service, despite you not receiving anything in return."
Of course, Fiverr is now (apparently) offering to refund people affected by this. However, this seems to be in reaction to public outcry.
In short, everything with Pete-gate has (in my opinion) happened as a direct result of Fiverr’s complete disregard for healthy conversation. If suddenly Fiverr got a phone call from their legal department, they should have immediately suspended Pete’s gigs and told him “sorry but because of this, we really can’t have you on our platform anymore.” At the same time, Fiverr should have reached out to affected customers to also explain the situation and offer some kind of remediation.
Because the above didn’t happen is why the whole affair blew up as spectacularly as it did.