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Starfield players pirate the DLSS mod after the developer locks it behind paywall
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It feels like the issue is that it was offering the convenience of payment to mods, but not really thinking about the necessary friction of assuring licenses/legality/etc. All of that CAN, of course, be an issue for cheap Unity games too. I remember back when Steam Greenlight started, they required each game to donate $100 to charity to even be considered, basically placing a bet of assurance that it wasn't a stolen asset flip (I don't know if they still do that).
I think you're exactly right - it is the combination of money + little oversight that is the big problem. Warframe seems to do a good job with tennogen but they limit it to only cosmetic mods and seem to be pretty restrictive about what they accept into their store. I don't see how you could have good oversight for a game with as many mods as something like Skyrim has.
It's not "oversight", but if a modder needs to create their own storefront and Paypal integration, and advertising through word of mouth and their own social contacts (as in this case it seems), then that's going to offer a lot more scrutiny than a low-effort asset flipper presenting themselves anonymously through Steam's given storefront.