Can ISPs really police file sharing for the RIAA?

Chewbacon writes: I've read a number of stories about the RIAA going after ISPs for file sharing such as Limewire or torrent services. My provider was featured in a local newspaper for not threatening to turn over file sharers, but disabling their service and forcing customers to call their security department to have it restored and even as far as adding hefty fines to their bill. The first scenario happened to someone I worked with and he said, "Oh, we have Wi-Fi, it wasn't us." The ISP even told him what file was being downloaded. They lectured him on Wi-Fi security and how he's responsible for protecting his network from unauthorized access and illegal activity. I discussed this with someone I know working for the ISP and he backed up what his company told my colleague. When I explained Wi-Fi encryption standards are compromised all the time and how MAC addresses can be spoofed to circumvent filters, he said the company still has ground to punish their customers for file sharing even if the perpetrator is someone who compromises a customer's protected network. Are there any other ISPs doing this? Has anyone heard of this backfiring for providers or impacting the lives of innocent people?