Appallingly bad design?
"The service also stores all student essays submitted – with the result that students are often accused of plagiarising themselves."
Surely it should also store who submitted the essay, and spot that it's being resubmitted by the same person?
On the wider issue of citation versus plagiarism, it surely ought to be capable of parsing the common forms of citation, such as text in quotes followed by a citation reference.
It's wrong that the computer is "scoring" students. Surely it should just return the essay marked up to show the areas of concern, which the student can then revise, and finally hand in the (marked-up) essay with a separate explanation for human consideration of anything where he can't satisfy the big dumb computer!