If a provider can get away with scamming people, without any sort of true repercussions other than a reputation hit, then the rate of "long cons" will probably increase by a lot.

From an anecdotal perspective, I used to be involved in gray markets like trading and selling MMO accounts. Generally there would be no repercussion for scamming the other party; the MMO companies forbade the trade, payment providers don't care, and the government doesn't really recognize it as a real transaction.

These markets had a deeply ingrained reputation system tied to the message board, but escrow was also very common. Many people would offer their services as middlemen to provide escrow for trades, but over time there became an alarmingly high number of middlemen who would properly handle dozens or even hundreds of trades, then scam both parties simultaneously once they came across the biggest transaction of their life. No repercussions came to them; they just stopped being middlemen and had fun with their treasure.

These kinds of examples show that reputation, cryptographic authentication, proof of payment, payment irrevokability, and plain man-in-the-middle escrow combined are still not enough to actually prevent fraud in many cases.

There are some examples of 2-man escrow systems out there using Bitcoin, though, which is far more promising. That prevents any one party from scamming the other 2. The remaining problem, which I imagine will never be solved, is the vendor proving or the buyer disproving that the vendor gave the goods or services that were asked for.