Of course they do. There are countless legitimate uses for a hidden camera. The only thing a visible camera is good for is to ensure that nothing bad happens in front of that camera.
And even a towel bar or clothes hanger does not automatically mean bedroom or bathroom either.
Closets and towel bars can and do exist anywhere, like kitchens, laundry rooms, front and rear entrances, mud rooms, workshops, offices, stock rooms, really anywhere.
They are even legitimate IN bedrooms, if it's your own bedroom. It's wrong obviously to peeping-tom on a guest or tenant, but if I want to monitor my own bedroom when I'm not in it, I certainly can, and that means the product can't be automatically invalid to exist.
If they are a legitimate product, how do we tell the legitimate product from this (in your words) "crappy attempt at covering the seller's ass?"
If they are a legitimate product and we can't reasonably tell the difference, why should Amazon have banned this product?