With everything going in the game ATM, this issue needs to be addressed ASAP.
Handling ModdersThere are 2 kinds of Modders in the game
1. Modders who are not caught by KABAM
2. Modders who are caught by KABAM
The focus of this post is to make a practical suggestion to KABAM to handle the second kind (one who are caught)
Currently, once a Modder is caught they are banned for a week. After that they can keep their rewards and go around flaunting their LEGEND title and all the Rank 4 / 5 champions they got illegitimately and compete in BGs and join high tier alliances playing AQ / AW. The current punishment seems like a tiny nudge more than a deterrent for Modders.
The following punishment should be dealt to the Modders who are caught:
1. Permanently delete their top 20 champs
2. Reset their story content to ACT 5 (if they have progressed beyond ACT 5)
3. Reset Carina Challenge Objectives
4. Reset Gauntlet Keys
5. Reset Abyss paths
6. Reset EOP Paths
7. Remove the following titles from their account (LEGEND / PARAGON / THRONEBREAKER / ABYSS STARRED BACK)
8. Delete / Empty all catalyst and gems from their inventory
The first response with deleting their top champs is crucial as this is what allows them to unfairly compete in BGs. But then again if they stop modding they won't do that well in BG's anyways. But this will cripple them from join high tier alliances. This will also lower their prestige and stop them from basically using unfairly obtained champs in any kind of content in general until they earn them again fairly.
Most of the resetting content suggestion is aimed at bringing them to a Cavalier status which again might be unfair for other honest cavalier players. But I guess there has to be some compromise. This also gives them a chance for redemption by playing the game honestly and try to win the rewards fairly. I din't include contents like ROL / LOL / Variants on purpose as the rewards from them are already out-dated with the current meta of the game.
Everything above is assuming this is the first time they are caught. If they are caught again it should be a permanent reset on their account. Again they can still choose to play right from ACT 1. All the changes suggested here will give honest players some value to the time and effort they genuinely put in the game and will strongly deter any Modder or their children / grandchildren (as said by our very own
@Kabam Miike 
) from Modding in the first place.