Makes sense to me. I get moldy strawberries so often at the local supermarket that I absolutely open the container and rumage around before I buy. If they bothered to remove the moldy ones for me, I'd appreciate it.

What's the alternative? Should they be throwing away the entire container?

At some point in the ripening, handling the berries damages them enough that it's not worth it, but otherwise the practice is fine. At the gourmet market I worked at, pretty much all the berries were taken from the original flats they arrived in and repackaged (removing the bad berries along the way).

Pro tip for delicate berries: when you get them home, remove them from the package they came in and store them in a broad container lined with paper towels, something big enough so they can be spread out with a minimum of stacking. They'll last much longer that way.

Mould is not like dirt that can just be rubbed off the product. If a package of strawberries has some mouldy berries in it, then that mould has already spread to its neighbours without being visible. All they're doing is repackaging the berries that don't have any visible mould on them, and that mould will grow very quickly.

If you buy a supposedly "mould-free" bundle that was repackaged from a mouldy bundle, the entire batch is likely to rot within a day or two of purchase.

The mould is most likely growing because a few strawberries where damaged and the rest got strawberry juice on them.

The mould is already there, just not visible, on all strawberries, waiting for some sugar and water...

They all have mold on them. It's only the ones that have mold colonies large enough to be spotted by eye that are sorted out. Does that correspond to how much mold is dangerous? Who can say?

Is this common place for frozen berries or are they generally packaged before any mold can occur?

To meet higher USDA grades, it seems like they must be pre-sorted to remove mold (among other things).

Example: https://www.ams.usda.gov/grades-standards/frozen-strawberrie...

PS: Side note, either USDA AMS hasn't updated their site in awhile, or some "most recent" frozen berry standards date back to the 50s/60s. Which, I guess makes sense; I imagine the process hasn't changed that much.