Gives site reasons to bar users.
But I don't think it should give site the ability to prosecute users. That power should lie with the state. If a user hacks to get into a server, the state already has laws against that, just call the cops. But you can't point to a clause in your ToS saying, "User X broke term Y, which is hacking." No. The state defines what actions are hacking.
It is not clear to me that a company needs to say they don't support illegal behavior by the users. It also isn't clear to me that a non-paying user can ever prosecute a website for refusing a service on the basis of the companies terms of service. If the company is already doing something illegal, then it is based on the current legal statutes that they can be prosecuted.
I probably don't understand legal liability here.
You also have to enforce the ToS. So Backpage or Craigslist personals are not able to just say, "We're not guilty of aiding prostitution. We tell users not to do that in our ToS."
No, as is the case with Backpage, they could still be held liable if they never actually removed anyone who was engaged in prostitution. It's not enough to say illegal things are not allowed and then look the other way. You have to say illegal things are not allowed, and come down hard on anyone doing those illegal things.
I don't remember the particulars since it was so long ago, but I believe craigslist went so far that they just removed any category that might be used for prostitution. In a court of law, that would be how you demonstrate that you're deserving of liability protection. Backpage was in a significantly different position, because they thought not enforcing anything would give them legal liability. Not smart.
You can see similar effects all over the place. When was the last time you saw a hotel actually enforcing any of their pool rules? Some rules are there because the owner actually cares, but others are there so the owner can say “I warned you” if they’re ever in court. Telling the difference between the two is often quite hard.
Not just that they "don't support illegal behavior", but more specifically that if you give them your money for a service, and then use that service to do something illegal, then they want to be able to cancel your service while keeping the money you gave them for that service. (Or, similarly, if you buy a product from them, then use that product to do something illegal, they want to be off the hook for processing any potential refund on that product.)
It's sort of like the rule most companies have where swearing at the tech support worker allows them to hang up on you, when they'd otherwise be obligated to stay on the line. The TOS allows allows a company to, upon seeing that you've broken it, immediately claim everything in your account-receivable, and to close your account-payable without making it current.
The courts will hold a corporation accountable to its own terms of service, ie. if they, say, terminated an account against their own terms, then they could suffer penalties.