Nobody is getting towed from W. 7th, period. It was an issue before they put in the pay kiosks, as many of us remember being chased off by rent-a-cops when they realized we were going to Fred's, etc. But I think it's now a pretty good system...park for free if you visit one of their vendors (and get your ticket validated), pay if not. Everyone wins, nobody gets towed.
People are getting towed.
The very bottom of the signs state that if you do not visit a Crockett Row establishment first then you will be towed.