CRIMINAL CAPITALI$M

California loses $200 million a year to recycling fraud, 5 or 10 cents at a time


Thomas Elias
The Desert Sun
Mon, January 10, 2022,

People recycle their cans and plastics at Apple Markett Recycling Center in Indio, August 13, 2019.

In California’s recycling program, nickel and dime deposits come to about $1.5 billion a year. But at least $200 million of that goes to criminals, according to a new report from the usually reliable Consumer Watchdog advocacy group.

The money piles high because more than 18 billion drink containers with California recycling value and are sold across the state each year. Buyers deposit five cents for each glass, plastic, or aluminum container holding less than 24 ounces and 10 cents for each one with 24 or more ounces of water, soda, beer, and other drinks (wine and hard liquor bottles are not included).

Roughly 30% of the cash raised every year stays in a special fund earmarked for future refunds because only about 68% of eligible bottles and cans get recycled.

Another 12% or more of the take — almost as much as last summer’s recall election cost — likely goes to crooks, despite the state Department of Resources Recycling and Recovery (CalRecycle) insisting that figure is high and “inaccurate.” The new Consumer Watchdog report titled “Cash for Trash” indicates the figure may be low. Its estimate of at least $200 million in yearly fraud stems largely from CalRecycle’s own investigations.

The state agency boasts of tough enforcement, citing 62,259 audits, investigations, and inspections over the past 10 years, recovering about $10.3 million a year, or a total of $103 million. That works out to $1,611 recovered per CalRecycle action — quite possibly much less than what the actions cost.

But recycling larceny is far more extensive than that, says Consumer Watchdog, whose prior reports on the gasoline, insurance, and utility industries have substantially proven out.

Recycling crimes appear easier to pull off than schemes that have defrauded the state Employment Development Department (EDD) of an admitted $20 billion-plus over the pandemic period. Recycling fraud likely accounts for almost as large a portion of recycling money as thefts ever did at the EDD.

It can work several ways. With no tracking when containers are turned in and paid for, they can be “ultra-recycled” over and over, fraudulent redeemers filing padded requests for state reimbursement. Criminals also bring containers from other states. California is committed only to redeeming its material, but buys plenty that originates elsewhere, says the new report.

Plus, trucks bearing cans and bottles can be stuffed with other things before being weighed and reimbursed.

So despite CalRecycle’s measures, it is likely being scammed continually.

This will not likely threaten Gov. Gavin Newsom’s reelection, just as the better-publicized EDD scandal did not hurt him in last September’s recall attempt.

Two factors here did not figure in the recall. For one, recall replacement candidates did not harp on the EDD. But if Newsom ever ran nationally, opponents would fully exploit the extensive fraud plaguing his administration. While the EDD affair involves more money, funds were paid mainly by employers, including many impersonal corporations. By contrast, recycling money comes from virtually every individual in the state, aged 4 to 104. The apparent theft from consumers is direct.

Meanwhile, Consumer Watchdog has some suggestions for cleaning up CalRecycle practices. One is to take matters at least partly out of human hands. Reverse vending machines could handle most beverage container returns with no fraud, as they do in several other states and some of Europe. These could most strategically be placed in or near supermarkets.

But market chains want little to do with recycling, one reason consumers often cannot find a place to recycle containers.

A current legislative proposal known as Senate Bill 38, sponsored by Democrat Bob Wieckowski of Fremont, would require the use of reverse vending machines, which could end many of today’s multiple reimbursements.

As it is run today, “the program is not fixable,” argues Liza Tucker, a Consumer Watchdog researcher who spent six months compiling the new report. “We say at least $200 million is stolen every year,” she said, adding that no one knows exactly how much theft there is “because CalReycle is a terrible enforcer and (today’s) honor system allows recyclers to (claim) anything they want for weight on which they are paid.”

All of which cries out for action, or at least quick passage of SB 38.