Gammit is correct, Its not really illegal, but Airlines do not allow it and if they find out they can disallow the ticket and cancel your account.
You are allowed to GIVE your miles to someone , so that is the loophole these places use, you give a ticket to someone and that person will then pay you.
Ive given a ticket to someone a few times, but I also flew with that person on the same flights so it did not raise a red flag, (Like you give your spouse or kids a ticket and fly with them or a friend and you fly somewhere together) however giving a ticket to someone and not flying with them does raise a red flag