I think that if the weather gets hot you're legally allowed to break the car window in order to rescue a dog in distress. Don't quote me on that. I think I saw it on an episode of "What Would You Do?"
Why don't you approach them directly and just ask what the deal is? This is just me, but I wouldn't care if it was my neighbor. What are they going to do, be snippy at you every time you see them from afar? Be pissed at you for trying to make sure an animal is being properly taken care of?
Do you really interact with them at all? And do you really want to pretend to be friends with people like that anyway (assuming they are just being knowingly cruel)? And if they're just ignorant, then maybe you approaching them can be the open door to educating them. Maybe you can offer to dogsit or something, assuming you're able to do something like that. Being locked in a bathroom or laundry room would definitely be a step up from being locked in a car all day, imo.. not that either is a pleasant life.
People like that shouldn't own dogs, but even animal control will rarely take animals away unless they're showing signs of malnourishment or severe distress. Most of their actions are slaps on the wrist since if they seize the dogs they also have to pay to have them vetted and then keep them until they find new homes OR euthanize them. From what I've seen, they'll only do that if they think that the dog is in so much distress that it'd be worth it.
"Be the change you wish to see in the world." I know it's scary and no one will blame you if you want to remain anonymous, but I think that all animals deserve to have someone step up and be their voice when they don't have one.
Thanks to Jan for my siggy!