MLM Basics: Why do so many MLM noobs don't understand "referral sales" is illegal?

It seems an MLM noob is very fond of her comp plan, which she described as

... I can find 3 people who also want sustainable <item> my order is then FREE

She doesn't realize that this is ILLEGAL. Yes, I said it. It is ILLEGAL.

This is called "referral sales", and it can be described as

1. Seller offer to prospective buyer a consideration (discount / rebate / commission, etc.) 
2. for a sale (or lease) of item from seller to buyer
3. the buyer must provide sellers list of potential customers
4. the consideration (see 1) is contingent on seller be able to make additional sales/lease to one or more of the potential customers (see 3)

And all four elements are in the quote found earlier. Let's check it again, with the elements highlighted.

... I can find 3 people (3) who also want sustainable <item>(4) my order (2) is then FREE (1)

And yes, this is ILLEGAL. In all 50 states of the US, and in all European countries, and Australia, and so on and so forth.

And you'd be surprised how many companies engage in this ILLEGAL behavior, and its affiliates are completely unaware they are being defrauded.