Yes, it's true. On the PC, Mass Effect can only be activated three times, after which the game will no longer work. However, the people at EA are not completely heartless to the plight of their customers: They will gladly sell you another copy.
The excuse given is that they need to combat piracy, but since pirates didn't buy the game in the first place, it's kind of hard to see how you could sell them a second copy. Apparently the EA solution to piracy is to make honest users buy it twice? It's a proposal so audacious that you sort of have to admire their ability to make it with a straight face.
Big publishers like EA have started whining about "the rising cost of game development" as justification for this sort of thing. I'm glad their eagle-eyed accountants have finally noticed what the rest of us have been pointing out for years, and I award them with a polite golf clap for acknowledging the problem, but their solution is a bizarre non-sequitur. It's like, you're spending too much on game development? Dude, stay with me here: Try not doing that.
Punishing earnest customers because you can't afford game development is like beating your dog because you want a raise. You're not solving the problem, you're just being a dick. (Unless of course you're employed as a dog-beater.) Maybe EA is trying to cultivate some sort of Stockholm Syndrome in its userbase, convincing people that they're being punished for their own good. Perhaps Mass Effect 2 will include a whip with the collector's edition, and self-flagellation will be part of the install process.
It is nice that we can get this unobstructed view of the EA strategy: To spend a great deal of money very poorly and then punish people for buying its products.
If you missed out on Mass Effect, no need to worry: This scheme is slated to be part of the PC version of Spore as well.
Shamus Young is a programmer and writer by trade, videogame nitpicker by inclination. If you have the patience for more of his ramblings, they can be found at ShamusYoung.com.