In fact they can and do. In the US there is a lost baggage "shopping mall" that the airlines dump their luggage to when they can't/don't return it to the owners. In most cases its legitimate because there is no identification left on the bag but I suspect in other cases they just give up trying for business reasons.

http://www.unclaimedbaggage.com/

The biggest protection that one has is to (1) not check a bag which BAA/BA rules make difficult with the idiotic one bag rule or (2) chose an airline with good lost baggage statistics which BA is not.