It's rather common for unpublished fares to subject to special rules including a "no upgrades" policy. These are discount fares offered through travel agents and consolidators, generally for the leisure market. They offer a way to airlines to sell cheaper space to price-sensitive travelers without having to cut prices for those who may be willing to pay more. Restricting upgrades (and sometimes things like frequent flyer mile accrual, changes, etc...) helps to ensure that these cheap fares stay in their intended market and aren't being used by, say, big-budget business travelers.
For example, LATAM won't give you any frequent flyer miles for unpublished fares (you'll have to check to see whether this applies to your tickets):
Nor shall kilometers be credited for any ticket issued as a LATAM Pass
award, nor other free ticket such as promotions or reduced-price or
free tickets or free companion tickets, charter tickets, discount
tickets for travel agents or industry employees, infant tickets,
tickets purchased for items that occupy a seat, unpublished fare
tickets, including consolidation rates, or tickets issued subject to
And on their page about upgrades (I think this is only about using points for upgrades, the rules for using money may be different) they say:
Only tickets paid in full, on fare profiles Y, B, H, K are eligible
for cabin upgrades.
Some tickets purchased from travel agencies are not
eligible to use points for cabin upgrades. Check the Sales Center,
Fidelidade and Services to find out whether the ticket purchased from
a travel agency is eligible for a cabin upgrade.
Simply put, you've bought a rather cheap fare. That's great; nice shopping! They're willing to sell a seat that cheaply because they believe it would otherwise go unsold. Since the marginal cost of carrying an additional passenger is low, while the fixed costs for operating the flight are something they're paying anyway, they'll take your money. But the airline wouldn't be profitable if they sold all the seats at that price, so they can only afford to do this on seats they think might otherwise go empty. As such, they put restrictions on these tickets that make them less attractive, and no upgrades is one of those restrictions.
They would rather sell the upgrade to someone else who is a more loyal (and profitable) customer of the airline, or as Kate Gregory notes, deny you the upgrade in the hope that customers buy more expensive fares in the future.