Diversification disappears without anyone noticing
A prop firm's payout liability is manageable partly because traders win and lose at different times. Copied strategies remove that offset. A single good day for the source strategy becomes a good day for every account copying it, and the payout cycle that follows reflects it.
Because each account looks normal on its own, account-by-account monitoring rarely catches the pattern until the payouts arrive.
Not all copying is abuse, and that is the hard part
Some copying is a clear breach: one person running many accounts, or groups coordinating to pass challenges. Other copying sits in a gray area, such as traders following the same signal service. Treating all of it the same way either lets the costly cases through or punishes traders unfairly.
The objection: just ban copy trading
Banning copy trading in the terms is easy and many firms already do it. The rule alone does not solve the problem, because the firm still has to detect it and prove it when a trader disputes the decision.
Detection means looking across accounts rather than within them: matching entries by time, symbol, direction and size, and connecting accounts through IPs, devices, logins and payment details. Proof means keeping that evidence per cluster so decisions hold up.
Managing the risk, not just the rule
Firms that handle copy trading well do three things. They detect clusters continuously, not only at payout time. They decide in advance how each type of cluster is treated. And they size their exposure as if correlated accounts were one position, because in practice they are.