In a comment on this question Did anyone (especially Yaakov) ever find out about the idols? Ezra says:
In Genesis 35:1-4, Jacob requests his household to hand over "foreign deities", and he buries them underneath a tree in Shechem. Perhaps the teraphim were discovered then, because shortly after this, Rachel dies (ibid. 35:17-20).
Other than this suggestion, do we know what happened to Lovon's idols that were taken by Rochel?
A couple of sources state that they were transformed into household objects:
"אָמַר רַבִּי יוֹחָנָן תְּרָפִים לֹא מָצָא קִיתוֹנִיּוֹת מָצָא, נַעֲשׂוּ תְּרָפִים קִיתוֹנִיּוֹת שֶׁלֹא לְבַיֵּשׁ אֶת רָחֵל."
"Rabbi Yochanan said: He did not find teraphim, but he found jugs. The household idols were transformed into jugs so as not to embarrass Rachel."
Midrash Aggadah (an anoymous commentary on Beresheet), p. 80:
"...וחזר ופשפש בכר הגמל ונעשה נס לרחל ונעשו התרפים כר מלא נוצה"
"and he rummaged through the cushion of the camel, and a miracle happened to Rachel and the teraphim became a cushion filled with feathers."
It's possible they stayed that way (consider for example this answer) and could then be used in a legitimate manner.
