They definitely track ip addresses.

I also believe that they have automated flagging of certain situations.

I received a ban when I logged in to one of my accounts. I was working away from home and logged in from a geographically distant ip address. This kicked my daughter who was playing on the account at the time back at my home address.

I was able to get the account reinstated when I explained that I worked away from home during the week and that the other player was my child. From that point on I only played characters on account 1 and only let the kids play on account 2 - until I got a job closer to home.

It would be incredibly easy to detect this scenario happening and to have an automated ban or automated report generated for a human to investigate.