In penalty marking, the group monitors the contribution of its members. If someone is not contributing, they are issued with a formal warning and a chance to improve. If the person still does not improve, then the group reports this to the lecturer and a penalty is applied e.g. that student gets fewer marks.
This is like the yellow card/red card system in soccer. The penalty can be agreed by the group in writing at the beginning or detailed in the Statement of Assessment Methods.
This is an example from the Law School at Flinders:
"Anticipating this problem, early in the semester we negotiated a disciplinary process for groups. The procedures allowed groups to report freeloaders to the tutor. The tutor could agree to a "yellow card", a 30 per cent penalty, being imposed on an individual student though the penalty would not be imposed if the student redeemed him or herself by negotiating and fulfilling a contract with the rest of his or her group. Persistence in the behaviour that led to the yellow card could lead to a "red card" being issued resulting in the student receiving no marks for group work. It was not expected that this system would need to be used often but it was hoped that it would demonstrate to students that lecturers were aware of the risks groups faced and willing to help groups address these risks. As the main criterion for assessing group presentations was the demonstration of the quality of the group process, it was something for which all members of the group could take equal credit or blame. Groups were encouraged to see difficulties as opportunities to demonstrate their skills, rather than worrying that they would be hampered in their attainment of traditional learning goals. So, for example, groups did not suffer from the existence of a freeloader as such, but from failure to address the problem."
Israel, M.A., Handsley, E., & Davis, G., 2004. It's the vibe: fostering student collaborative learning in constitutional law in Australia. The Law Teacher, 38(1), 1-26