How would that be much of a deterrent? Wouldn't that actually be good advertising for someone's merit selling business? I always thought the punishment for selling merit as a merit source would be to get stripped of the privilege and perhaps a ban on the account.
Edit: Now that I think about it though, I guess someone would have to be really bad at covering their tracks in order to have a sufficient case for the staff to implement such measures.

I assumed that removal of the merit source privilege is certain if the source is caught selling. I'm saying red trust would be on top of any other penalties so you wouldn't be able to:
Become a merit source -> make some money by selling some merits -> lose the privilege -> carry on as if nothing happened. You'd be labelled as a scammer.
Catching the perp is the hard part, that's true. But so far the known merit sources are fairly established forum members who probably wouldn't risk their reputation for a few bucks, and if they sell more than a few merits the risk of getting caught is greater too. It's a trust issue basically so I hope theymos considers that when deciding whom to appoint and how to allocate sMerits and how to police them.
I suggest to lure them in a thread with the title FREE MERITS HERE!!!! and trap them there.
I'm trying LOL
There should be more merit source to solve this problem. 120 people are definitely not enough to cover the thousands of posts made every day in this forum.
There is no need to review thousands of posts. Most of those are bounty reports, megathread spam, or just spam, and merit sources don't really need to read every post. It depends not so much on the number on sources but on how well they're spread out on various boards and how many merits they actually send out.