California's can recycling scheme is costing the state up to $200million a year in fraud as millions, if not billions, of beverage containers are being trucked in from neighboring states and illegally turned in for 5 cents each.
Most bottles and cans sold in California are subject to a deposit, which is meant to give buyers an incentive to turn the cans in to recycling centers instead of tossing them on the state's roadways and parks.
However, when cans from a state that doesn't have a deposit scheme are turned are in, fraudsters can collect the 5 cents each from California without having paid the deposit.
Last year, 8.5billion cans and bottles were purchased. About 8.3billion were turned in for the nickle deposit.
The Los Angeles Times reports that the 98 percent recovery is not a remarkable success -- it's clear evidence of fraud. For some types of bottles, the return rate was 104 percent, meaning more were cashed in than were purchased.
The fraud isn't new. It's so well-worn that it was parodied in a 1996 episode of Seinfeld in which Kramer and Newman plan to collect bottles and cans in New York and drive them to Michigan, which has a 10 cent bottle deposit.
Some experts estimate that fraud in the $1.1billion recycling program is costing $200million. The state itself estimates $40million in fraud.
Either way, the program paid out $100million more than it took in from deposits.
The loss is only one more financial drain on a state with a $16billion budget deficit.
Regulators say they have caught dozens of people trucking cans and bottles in from Arizona, Nevada and other neighboring states that don't have a deposit program.
There, they can be purchased as scrap -- for far less than the 5 cents each that they're worth in California.
If the state is, indeed, the victim of $200million in fraud it means up to 4billion cans and bottles are being illegally returned -- nearly half of all the deposits paid last year.
In just three months at just 16 border crossings, the State Department of Agriculture counted 3,500 trucks hauling cans and bottles into California.
Despite this, there were only 10 criminal cases for recycling fraud last year.
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