Wow this "business" is violating so many laws my head is spinning. In addition to everything else people have mentioned, if all the payments are labeled as "gifts" and the "business" is not licensed and not collecting sales tax, I bet they are also not reporting profits as income.
We can add probable tax fraud to the list
In the 2008 thread they mentioned not needing to find jobs because they babysit in their home for work--which is a source of income which is often under reported (if at all). The cynical side of me wonders how many years the people have been earning money under the table and not paying taxes (and possibly collecting other benefits as they show minimal income?). I am very rarely that cynical, but based on the clearly unethical behaviour they have shown to customers (insisting things be listed as "gift", sending empty boxes, not responding to messages, etc etc) my mind is going there now.
OP, I am glad you started this thread so that I (and others) know never to order through these people (though, personally, I think being told to designate a payment as a gift would have stopped me from dealing with them anyway).