According to a just-released Consumer Watchdog report, the bottle deposit program of the California Department of Resources Recycling and Recovery (CalRecycle) loses at least $200 million a year to criminals.
The report notes that criminals use many fraudulent methods to scam recycling centers out of the California Redemption Value (CRV) labeled beverage containers, which can be redeemed for 5 cents or 10 cents if the container is 24 ounces or greater in volume.
Among the methods include:
- bringing in containers from bordering areas with no redemption program such as Nevada, Arizona, or Mexico
- weighing the same truck of redeemable containers more than once at centers
- falsely stating where containers came from to get more money back
- recycling the same containers over and over again due to a transaction log loophole
- false documentation of non-existent containers
- adding non-CRV containers in large loads
- falsifying weight tickets
The high amount of fraud added up. Of the $1.5 billion a year that California pays for CRV deposits, $200 million goes to criminals. And according to Consumer Watchdog, the actual number may be higher due to the figures coming from CalRecycle investigations. While CalRecycle didn’t deny that at least some payments were fraudulent, they said that the figure given by the report was high and inaccurate. CalRecycle also noted that over 62,000 audit investigations during the last decade have recovered $103 million.
Despite that success, fraud still runs high, with half of all recycling centers being shut down in the state since 2013, and reform of bottle deposit fraud still not happening despite experts saying that a return to bag drops and reverse vending machines would lead to less fraud, and beverage makers and distributors taking back part of the system would lead to better accountability.
Losing $200 million a year to fraudsters
“This report is not surprising,” Glen Hernandez, a recycling center owner in LA County, told the Globe on Monday. “There’s fewer and fewer of us left, with more and more trucks and people coming in to recycle. And reverse vending machines can help, they really can, but there’s a reason that they fade in and out in California. You would not believe how many people I talk to that go on about how there used to be one of those machines nearby them but then it was gone. Personally, I remember when those aluminum can little kiosks were in the middle of strip mall parking lots all over about 30 or 40 years ago. Then those went away, then they returned in a way with CRV payments, but those machines broke down a lot and were out of service.”
“Now we’re trying to get them again, saying that it will beat fraud. Some, yeah, but how are you going to stop the guy in Vegas who hangs collecting cans, drives them across the border, then does the maximum amount of recycling for days? That’s the guy to target, that’s the big one. And I know there are bar codes and things to deter that at smaller stations, but not in bulk.”
“I hate these scammers. And it’s great that the report is showing how much money is being taken and how they’re doing it. But the redemption system isn’t working.”
Consumer Watchdog favors an Extended Producer Responsibility (EPR) model to reduce fraud, putting the duty of reducing fraud on the beverage and beverage distribution companies to take some responsibility and create a beverage container stewardship organization to act as a middleman between payments to help detect fraud more easily.
“If California chooses an Extended Producer Responsibility model for its bottle deposit system, it will go a long way towards fraud reduction through the use of efficient technology,” the report said. “Such successful systems in Europe use more comprehensive and technology-based approaches using modern Reverse Vending Machines. In addition to providing accurate data on container return, RVMs can prevent double redemption of receipts and containers, and can swiftly and accurately verify whether a deposit should be refunded, so they reduce the risk of error or fraud compared to a manual take-back system.”
The addition of internet connected reverse vending machines and bag drop centers, to also quickly determine fraud, were also recommended in the report, as well as the passage of the pro-Extended Producer Responsibility Bill SB 38, authored by Bob Wieckowski (D-Fremont).