Bottle deposit scams are no laughing matter

Dan Papineau

Many will remember the May 1996 “Seinfeld” episode where Kramer and Newman crafted a plan to return empty bottles and cans bought in New York to Michigan to receive our state’s 10-cent deposit. Targeted because Michigan has the highest bottle deposit rate in the county, their plan was ultimately foiled.

Recently, a man was caught attempting to carry out a real life Kramer-Newman plot in Genesee County. A man was pulled over for speeding and the officer noticed an unusual amount of bottles and cans in his vehicle. It ended up that this guy had more than 10,000 bottles and cans in his vehicle purchased out of state.

Since the 10 cents was not paid at the time of purchase, he was committing fraud, trying to exploit our bottle deposit system to pick up a quick $1,000. Our first reaction to hearing about this might be to laugh. Could you imagine how ridiculous this could appear? The fact is, though, that this type of fraud happens all the time. Ninety percent of bottle deposit fraud that takes place never gets reported. Even when it is reported to Treasury, nothing gets done.

The bottle deposit redemption rate or the rate at which people actually return their empties to get back their 10 cents, has fallen continuously for almost a decade. Without taking fraud into account, how do we really know the actual redemption rate? When this fraud occurs, it the consumer who pays. Studies show that this fraud costs Michigan taxpayers $10 million to $13 million per year.

It also begs the question: How successful is Michigan’s bottle deposit law when there is no way to take this type of fraud into account?

Some may try to argue otherwise, but our bottle deposit laws are a failure. As the backbone of our state’s recycling policies, material covered under bottle deposit laws make up only 2 percent of all the waste we generate. Our policies in Michigan ignore 98 percent of all the other waste materials generated that largely end up in the landfill. This is why Michigan has an embarrassingly low recycling rate of 15 percent. This is the lowest in the Great Lakes region. The average recycling rate among our neighboring Great Lakes states is double ours at just over 30 percent. It is also important to note that none of these states has a bottle deposit law.

Looking across the country we know that comprehensive curbside recycling policies are the most efficient and cost effective. Curbside recycling programs cover 33 percent of the waste we generate (remember, only 2 percent of the waste we generate is covered under our current bottle deposit system). In addition to being more effective at diverting material from landfills, comprehensive curbside programs have lower collection and processing costs and higher potential revenues than our current bottle deposit law system.

In addition to the environmental benefits for strong recycling policies there are also economic ones as well. If Michigan was to achieve just a 30 percent recycling rate it has been estimated that it would create up to 12,860 jobs and generate up to $300 million in income, up to $3.9 billion in receipts and $22 million in state taxes.

We know what Michigan must do to increase its embarrassingly low recycling rate, and now everyone must work together to work toward implementing these policies.

Dan Papineau is the director of government affairs for the Associated Food and Petroleum Dealers and chairman of the Michigan Recycling Partnership.