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Yeah rules are rules and they have to be respected, doesn't change the fact that there x different countries with x different languages in the game.
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I'm not supporting the time the decision was made, but just because the players in that guild are from different countries with different languages - it doesn't mean they wouldn't know what a racial slur is. Based on the fact that the guild name was 'Dirty *racial slur*' indicates to me that the owner knew it was a racial slur. It's irrelevant whether or not they were from different countries.
But yeah, it is strange that it was not dealt with sooner