[tremon]

Are these "residential proxies" assumed to be infected devices part of a botnet or malicious apps on users' phones?

[Galanwe]

A lot of these residential proxy as a service companies just use regular ISPs to run their automated headless browsers. It doesn't need to be illegal.

[prmoustache]

I guess iot devices and mobile apps.

Unethical, definitely. Illegal, no.