I started using an Android app that is offering in-app incentives (unlocks) in return for 5 star ratings on the Google Play app store. Is this against Google Play's terms of service?
Highlighting one part of policy violation, related to what you say
Here are some examples of common violations:
Asking users to rate your app while offering an incentive
It is against Google Policy, and also against The United States Federal Communications Commission's (FCC) advertising rules.
How to report such an app- You may have some luck by creating a post in https://support.google.com/googleplay/community. Don't be afraid to mention the app's name in there. The matter will be looked into by a moderator there who will then escalate the issue to Google staff.
I did the same thing in the Google Maps forum after an oil change place offered me a $10 discount for a 5 star review. He was taking the customer's cell phones and writing those reviews himself. He had over 500 reviews and after about a week they all disappeared.