A very popular method is to hire black hats to seed illegal content. Then the black hats record every connection made to them and get paid by the record/movie companies to provide the IP address of all downlaoders.
The media companies then try to bully your ISP into providing who is attached to the IP address. Various ISP's respond differently. Some cough up the names to avoid threats from the media companies, some tell the media companies to screw off, others respond by sending disconnection threats to the downloaders if they don't stop. The last manages to protect the downloader and the ISP which is about as good as you can expect.
For those thinking that this process is entrapment and illegal under USA law, you are correct but civil rights don't seem to apply under DMCA...
Don't download, it isn't worth it if you get caught, especially since the media companies also pay the black hats to upload fakes which make up over 95% of posted downloads. You can buy a **** load of content for the $5k-20k fines. And if you make a fuss about it the federally mandated penalty is around $100k PER INFRINGED song or movie and when the media companies go to court that is what they seek.
If you think you won't get caught, that is what all criminals say. On the other hand, presence of a BOT or virus on your system has been an acceptable defense in some cases. "The BOT did it." There is still no clear/consistent case law governing how the prosecution goes. Very few have risked the $250k or higher fines charged when you go to trial instead of paying a few thousand to buy off the media companies. Figure on spending $20-40K on lawyers whether you win or loose. If you win you will have to counter sue to recover the legal fees. Only one person has won a counter suit and I beleive that is under appeal which costs anonther $20-40k.
BTW Those who brag about providing open WIFI to their neighbors. Ask yourself what they are downloading on your IP address which you are legally responsible for the activity on! The "my visiting nephew did the downloads without my knowledge" defense has failed miserably in court.