It probably is illegal if they aren't disclosing a paid relationship: https://www.ftc.gov/tips-advice/business-center/guidance/dis...
[0] https://www.ftc.gov/sites/default/files/attachments/press-re...
Specifically: "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful."[1]
This voluntary guide helps people understand how the FTC inteprates that law. Deciding not to comply because the guide is voluntary doesn't preclude prosecution.
You are right insofar as there is no law that specifically says "on the website reddit.com you must disclose if you are paid".
What is making you think this is true? It's not.
For example 3/4 of the example cases here are around undisclosed financial arrangements in influencer marketing, and in all cases the company admitted fault: https://mediakix.com/blog/ftc-influencer-marketing-violation...
I'm not sure what your definition of illegal is, but there is a law that the FTC is using to win legal cases on the issue.
This is one of the least appropriate uses of the word "specifically" I've ever seen.
That law just says "Don't do bad things. You know who you are."
It all exists on a spectrum though, and we can disagree on where the line for black hat is drawn, with no one being wrong because it's a matter of opinion.
That's black-hat SEO -- where the behavior itself is probably illegal, even without the intent.
https://www.ftc.gov/tips-advice/business-center/guidance/dis...