According to the article they were indeed hashes, but they were converted to lowercase _before_ hashing.
This effectively makes your password case insensitive and probably reduces the % of support tickets (some people might not just click a reset password link and will insist they were typing it right, so they will open a ticket - all because they forgot capslock). It reduces operating costs at the expense of lower security and somebody must have considered it to be worth it.
But why don't they use the proven common-sense strategy of not storing the passwords at all, but store the hashes instead? They can validate by converting user-input to a hash and then there is no harm even if the user auth table is stolen.