a) the coaches lie about it. They're not upfront about them losing their scholarship as being a possibility. Do you really think they'd get that many recruits if the coaches told them they may get cut. No.
and b) they do it to upper classmen who have no other options. It's one thing to be honest and tell a freshman it could happen. If it does they can easily transfer to another school. Juniors and seniors can't, unless it's D-2 or JC.