Hmmm … this sounds like nothing shy of shady and unethical. Further, there are slippery companies that use interviews as an opportunity to “challenge” the interviewee by having them do some work they do NOT want to pay for.
My two cents, FWIW, is to run very far and very fast away from this group. It may just be a test and nothing more, but if they’re willing to ask you to hack another business’ API, then there’s no telling what they might ask you to do IF you even get the job. I would recommend looking for a more pleasant group of people to work for.