I'd always thought these were kind of tacky, but was surprised to find out they were illegal:
United States Code Title 4 Chapter 1 §8.i
The flag should never be used for advertising purposes in any manner whatsoever. It should not be embroidered on such articles as cushions or handkerchiefs and the like, printed or otherwise impressed on paper napkins or boxes or anything that is designed for temporary use and discard. Advertising signs should not be fastened to a staff or halyard from which the flag is flown.