Follow With Pride dealt with a limited number of things like songs, banners, etc. so your quote of it's potential penalties doesn't really apply.
The Season Book T&Cs that I think apply are:
"Misconduct by the holder and /or failure to adhere to these conditions or the ground regulation or the holder acting in a manner which the Club considers
is detrimental to it interests or it likely in the reasonable option of the Club, to bring football or the Club into disrepute shall permit the Club to confiscate or forfeit (in each case without compensation) this card and /or ban the holder from attending future matches or other events at the stadium for such period of time as the Club deems appropriate."
So, nothing specific specified (like arrest), and also no commitment to do anything ("shall permit"). So, I'd say they didn't know they wouldn't be able to use them.
I'm not sure how much small claims would be able to do unless it could be shown that the club had already decided to remove the ST prior to taking their money, or other unusual situations like this years ST being their first one, or being arrested but no charged, but might be worth a try, depending on the situation of individual cases. Out of everything here, the timing in relation to ST renewal is the most disgusting.
(Hi. First post, be gentle. More of a reader than a poster, but this has me raging)