I can't necessarily tell you what other people do, but I manage a mattress factory, and I can tell you how we handle them.
We never sell any part of a used mattress at all. To whoever said it was a slap on the wrist, CPSC has cracked down big time on any manufacturers who sell used mattresses or mattresses with used components, as well as anyone not complying fully with fire retardant regulations.
In our state, it is illegal for us to do anything with a used mattress other than throw it away. What we do is put them in a stack outside of the factory, and let charitable organizations or anyone who needs a free mattress come and take them. That way, we have complied by putting them in a trash pile, but people who need them know where to find them.
I have heard about companies reusing or reselling old bedding, and that makes people wary of even companies like us who try to be honest.