I'm pretty sure it is illegal... but if you search hard enough you can find sites like that for just about everything... I didn't know this a few years ago and bought some R&R jeans. I was SO upset when I realised they were fake. Now I'm really careful and try to only purchase from stores or the company's website.
There has to be somewhere you can report it to... I don't know where though.
Notice the only place that it says "Replica" is in the title bar, I almost missed it until I clicked on the Gigi and saw how nasty it looks. Hopefully Coach can do something about it since they stole the stock pics.