There was a time (and probably still is) where your ISP would monitor the data on your connection.
I think I've related before that my neighbour and I share a connection, and he was a reasonably heavy Torrent user, downloading TV programmes and films. The default settings in the Torrent software he was using meant you were a seed as well as a downloader.
As the connection owner, I had two separate and distinct formal warnings from the ISP, telling me exactly what film was being shared and the time etc. I think there are agencies which monitor that stuff, maybe on behalf of the production companies or distributors, who then alert the ISPs who have to take action.
The threat from them was that they would cut off my line, but of course there can be much greater sanctions for illegal downloading, but I tend to think it's like illegal drugs - users get off reasonably lightly whereas people dealing (sharing) would have the book thrown at them.
Given that Kodi is often used to access illegal TV feeds that's why there are warnings about getting a VPN, as your ISP can no longer see what you are doing.
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