Actually, my understanding is that it is in fact illegal to have unpaid interns do work that you would otherwise pay someone for. Internships are for the edification of the intern, not the company. That's the reason they're allowed to exist at all in spite of minimum wage laws.
1) The determination if an intership covers a function they would have otherwise performed is very deferential to the company.
2) Interns do not have the resources to litigate if they believe their position is illegal. Even if they did, they would likely recover less than their costs. They also do not uniformly have access to competent labour regulators who follow-up on these matters.
3) The protections offered vary by jurisdiction as well as by industry/profession.
4) Interns also require networking and references in order to gain the full benefit of their work. Sounding the alarm on a company's hiring practices is a great way to poison the well.
https://smallbusiness.findlaw.com/employment-law-and-human-r...