Hi Cheri,
Thank you for sounding the alarm. This scam has been going on now for many years in one form or another online. It's practically as old as the internet, but just keeps on evolving.
If you do a Google search for "Title 18 Sec. 1302 & 1241 of the United States Postal laws," as posted on the site, you will simply find several hundred sites offering exactly the same scheme.
Here is what the US Postal Service actually says in a post regarding Title 18, the part of the postal service related to fraud, obscenity, identity theft, pyramid schemes, etc.:
Do not be fooled if the chain letter is used to sell inexpensive reports on credit, mail order sales, mailing lists, or other topics. The primary purpose is to take your money, not to sell information. "Selling" a product does not ensure legality. Be doubly suspicious if there's a claim that the U.S. Postal Service or U.S. Postal Inspection Service has declared the letter legal. This is said only to mislead you. Neither the Postal Service nor Postal Inspectors give prior approval to any chain letter.
Section 1302 covers chain letters, and Section 1241 doesn't even exist! The fact is that the scheme is illegal, has always been illegal, and has never been endorsed by Oprah Winfrey.
For further reading on scams, hoaxes, fraud, spam, etc., and how to deal with it, visit these sites:
http://www.breakthechain.org/
http://snopes.com
http://scambusters.org
http://urbanlegends.about.com
http://www.hoax-slayer.com
God bless,
Dave