The same companies that sponsor spammers, such as RIAA, & movie equivalent get particularly concerned when newest releases of their material is found being shared on p2p sharing networks. They may track one such one, send an email to the ISP & the ISP 'might' pass that on to the user. Some ISP's will not react, some do. Also up to the ISP as to whether they pass on personal information. I would not stay with any ISP that did pass on personal information which I believe is a breach of their privacy agreement with the customer for a start (breach of contract & legal confidential laws), unless exceptions are stated in their policy rules on their site.

Yes, scare tactics are used all the time. Unless they find willing ISP's to pass on information, there's not much they can do AFAIK.