Not necessarily. Usually someone feels that you've done something to merit a hug before they give you one. So, in that sense, they aren't necessarily free, even if you didn't pay for it monetarily. In this case, these people are giving hugs to random strangers as they walk by, with the only motivation being that they, too, are humans like we are. Being a human is something we are born with, and therefore free. Unless, maybe, you believe in being reincarnated as animals, in which case being a human probably involves a certain merit based on living in accord with karmic law. So you'd probably have to hug dogs, tigers and mosquitoes, too (if they walked by) for them to be free.
Anyway, nice video. I've seen videos of the "love police" in the UK that virtually do the same thing. They've been putting up videos on YouTube for some time now.