I can only speak broadly about this, but I have recent knowledge of one case where a man had well over 1m points, and he suffered an illness leading him to not use his account, and eventually the points were wiped. Again, only noticed when his son helped him to login to redeem some flights that they noticed (a holiday in F to thankfully to celebrate an almost-complete recovery after years of rehab).
At first QF didn't budge, didn't offer any reinstatement 'challenge' etc. Strongly worded letter from a friendly legal type sorted them out though ;-)
As many have indicated above, the use of the monthly spam email as your only warning of impending financial loss (yes, the points do have a value...) is likely highly unreasonable.
I suspect QF know that they would lose any such case were it to be litigated, but the number of people willing to do so when the legal cost may very easily exceed the value of the points is also very small that it works in practice. Not everyone has a lawyer in the family willing to spend 3 or 4 hours hassling QF for gratis.