## California redemption fraud in spotlight again
_By Jake Thomas, Resource Recycling_
California's beverage container redemption program is hemorrhaging money due to fraud, according to a recent report in the _Los Angeles Times_.
The Golden State's beverage container redemption program uses a $1 billion government fund to collect and pay out California Redemption Value (CRV) fees on covered bottles and cans, which in the past has attracted [unscrupulous individuals trying to make a buck](http://resource-recycling.com/node/1042). The recent [article](http://www.latimes.com/news/local/la-me-can-fraud-20121007,0,2053479,full.story) found that last year the fund paid out $100 million more than it took in from CRV fees and other sources, some of it due to dealers hauling in truckloads of bottles and cans from neighboring Nevada and Arizona and cashing them in for their CRV redemption value.
According to the _Times_, the California Department of Food and Agriculture counted all vehicles driving into the state carrying used beverage containers through 16 border stations last June through August. During the three-month period, they counted 3,500 trucks, including 505 rental trucks full of cans. That pencils out to about 39 trucks a day.
Citing estimated numbers from state officials, the amount of fraud is at $40 million a year, according to the _Times_. The article also cites an unnamed "industry expert," who said it could exceed $200 million.
"You've got to love those unsourced and unsubstantiated numbers," said Mark Oldfield, spokesperson for the California Department of Resources Recycling and Recovery (CalRecycle). "There is no evidence to support that number."
According to Susan Collins, the president of the Container Recycling Institute, in order for the $200 million number to be true, it would require two-thirds or all containers generated in the states of Arizona and Nevada -- including glass, plastic, aluminum and steel -- to be illicitly trucked to California for redemption.
Collins, in an email to _Resource Recycling_, called the article "a bit sensationalist." For example, Hawaii, according to Collins, has a redemption rate of 76 percent under its container redemption program, which likely has little to no out-of-state containers because it is a far-distant island. California has an 82 percent redemption rate and collects and pays redemption value on containers that come through the state's redemption centers and curbside materials, which account for 8 percent of the total rate, according to Collins.
The article cites a 2010 report from the California state auditor which found that CalRecycle doesn't adequately follow up on fraud tips. The report recommended that the department track all fraud leads and formalize the approach used to analyze recycling data as well as the criteria used to decide when to investigate any aberrations.
According to a 2011 follow-up report from the auditor, the department has taken "partial corrective action" by drafting procedures for analyzing fraud tips while also making better use of data to sniff out anything fishy.
"The department acknowledged that systematic and defined documentation of its current practices and methodology for reviewing recycling data for potential fraud would be valuable, but it has not yet developed and documented these procedures," reads the report.
According to Oldfield, CalRecycle is modernizing its fraud-prevention approach to be more proactive and seeks to keep better tabs on data that suggests fraud. He also said that the department will be applying higher scrutiny to those who want to operate recycling centers, which sometimes have an incentive to turn a blind eye to shady dealings in order to maximize their volume and redemption pay-outs.
Last month, Gov. Jerry Brown signed a bill meant to crack down on fraud in the state's container redemption program. Under the new law, individuals coming into California to declare if they have 25 pounds or more of plastic and/or aluminum and 250 pounds of glass and must state what they intend to do with the material.
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URL: http://resource-recycling.com/node/3157
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