No matter what you think, not even your ISP can tell what you are doing on the internet. However, they can follow your activity by checking your public IP address that your router uses so as to access the Internet.
Now, it’s entirely possible that someone can use that address for criminal purposes and this can lead you into trouble for not fault of yours.
Given that your public IP address is available on the internet, it’s easy for someone to discover your location and your ISP as well. In fact, your ISP can identify it as your IP address if they are subpoenaed.
Which begs the question: how can someone use your IP address?
Most probably, this could be someone you are living because everyone who uses your home network is probably using the same public IP address.
It is for this reason you need to first address this situation, if it does occur, with your family or roommates.
Another reason for this could be a neighbor who has hacked into your Wi-Fi network and is using it without your permission. Of course, you’ll have to consider this as well and change your Wi-Fi password while tightening your router’s security too.
Finally, there’s another possibility that can occur. Since most home internet connections have a dynamic IP address, this means that your IP address can change from time to time. So, if you’ve been accused of illegal activity, always check with them as to how long you’ve been using this address for.
That said, it could also be that someone is spoofing your IP address, and for this, you can ask your ISP to give you a new one and which will solve the problem.