I'm not sure I understand the correlation between storing a case-insensitive value and encryption type / data storage medium.
Just because they do pre-processing on a value passed over secure means (in this case .toLower() or toUpper() or equiv.) before inserting it into a database doesn't hint at all at what format is being chosen for storage.
It's a silly thing to do and might hint at stupidity, but it's not "IT Security 101 Fail" unless more information can be ascertained.