No, it is not illegal for individuals or retail stores to sell used mattresses or mattresses containing used materials. Federal law only mandates that mattresses constructed with used stuffing be labeled.
Though some states have laws governing the labeling of used mattresses, the sanitizing process they must undergo and which parts may be recovered from old mattresses for the manufacture of new ones, many states do not. In fact, some bedding is offered for sale without labels of any kind. Thus, the responsibility falls to the consumer to become informed of state law and to purchase properly labelled mattresses from reputable sellers.