What perils? Later in the article, lawsuits are mentioned, but the whole thing is pretty vague.
Putting aside both the legality and morality, doesn't this policy seem odd? If there's nothing wrong with what people are doing, then there's no need for this at all. If people are doing something wrong, shouldn't there be legal censure, or something? Not just a warning about some mysterious "perils of downloading unauthorized content"?
What premises could you possibly have that would make the correct conclusion "warn people 5 times and then take some vague and indeterminate action"?