It's basically fraud. So yes, they probably got picked up by an automated algorithm that looks for hijacking/CC fraud or bot-nets."
No, it's not "basically fraud". Yes, it violates Google's terms, and banning the customers from using Fi would have been a reasonable response, but Google's TOS is not enshrined in criminal law. Unless your position at Google is on the legal team, you might want to be careful about throwing around phrases like that with nothing to back it up. By admitting you work there, you are officially speaking for the company with such statements.