It doesn't need to happen quickly. Maybe no merit would be lost the first month of inactivity but 1 merit would be lost the second month. A 2 merit loss could be lost the third month, then 4 and so on.
So this wouldn't hurt occasional inactivity but it would quickly remove credibility from the inactive hacked accounts which are later sold.
If Merit losing rate is balanced right, it could work. After few months, speed of losing Merits could increase rapidly. Also people that want to keep their accounts active could login from time to time. I guess it would not be so hard.
Not a bad idea. It's not just the merit itself, but also sMerit (which is often used to farm up their alts). I'd like the sMerit of inactive accounts to decay significantly faster than those who are active (e.g. 5-10x faster).
Combining OP's and Lauda's idea, and we get really good one. Also those confiscated sMerits could be redistributed for further use.
Forum admins could also add setting which would put account into stand by mode, which people could activate when they know they will be inactive for month or so. And if account is not activated in the mean time or after that limited time, it would be treated like it was inactive the whole time and would receive penalties.