State looks to crack down on bottle deposit fraud
CAPITOL In 2009, eight Long Island men were arrested and charged with illegally redeeming the same bottles and cans multiple times, stealing millions of dollars from companies such as Pepsi and Anheuser-Busch.
Gov. Andrew Cuomo’s proposed budget for 2013-2014 seeks to crack down on this type of fraud.
The governor would amend the state’s bottle bill to require “deposit initiators” to file detailed reports and make quarterly payments, and imposes stiffer fines and penalties on those who fail to do so. Another change would require bottlers and deposit initiators to notify the state whenever a bottle or bottle label appears to have been altered — an indication that it could have been deposited illegally, from out of state.
Under state law, a deposit initiator is the first bottler, distributor, dealer or agent to collect the refund value on a beverage container sold in New York state.
Cuomo’s effort to crack down on bottle deposit fraud is part of a package of changes to the state’s bottle bill law.
These changes include giving stores and redemption centers the right to reject bottles that aren’t “reasonably clean,” and allowing stores of less than 10,000 square feet to accept only 72 returned cans per person each day. Right now, the limit for most stores is 240 cans per person per day.
Steven Harris, president of the New York State Beer Wholesalers Association, praised the changes, saying that abuse of the state’s bottle-deposit law is rampant.
“There’s unbelievable fraud happening as we speak,” he said. “This bill is designed to get the fraud out of the system.”
But environmentalists expressed some concerns about the proposed changes.
They said they support cracking down on fraud, but they worry that the bill’s other provisions will make it harder to recycle. They said they oppose the measure that would allow smaller stores to accept only 72 cans per person per day, and the measure that would allow stores and redemption centers the right to reject unclean bottles.
“Not all of the changes are good ones,” said Laura Haight, a senior environmental associate at the New York Public Interest Research Group.
The governor’s office estimates that stepped-up enforcement of the bottle bill would bring in an additional $4 million for the state Environmental Protection Fund. Another proposal would transfer $15 million in unclaimed bottle deposits to the EPF. Combined, the governor’s two proposals would increase funding for the EPF $19 million, to $153 million.
The Environmental Protection Fund pays for a variety of environmental programs, including open space programs and parks and recreation, and increasing funding for it has long been a priority of state environmental groups.
Andrew Postiglione, the fiscal policy program director for Environmental Advocates of New York, said that the bottle bill would “let smaller businesses off the hook” by allowing them to accept fewer bottles. He also said that making it easier to reject unclean bottles was a bad idea. “Now there will be a lot more discretion to the process, which isn’t necessarily a good thing.”
“It doesn’t help consumers,” she said. “It’s going to make it harder to return bottles and cans. The bottle bill works because it’s convenient, and we’ve worked hard to make it convenient.”
The bottle bill was last changed in 2009. Modifications included an increase in the handling fee, from 2 cents per container to 3.5 cents, and an expansion of the bill to include water bottles.
Harris said the increase in the handling fee served as an incentive for “nefarious people” to get into the redemption business and commit “serious fraud.” He said it’s impossible to verify the number of bottles collected by recyclers, and that it’s not uncommon for his members to open up a bag that they’ve been told is filled with cans and find two or three milk jugs hidden in the middle of the pile.
“They’ll give us a bag that looks full, but maybe it’s 50 cans short,” Harris said.
Another problem is “double redemption” — bottles and cans being redeemed more than once. “Instead of getting five cents for a bottle, people will be getting 10 cents, 15 cents,” he said.
Harris said environmentalists see the bottle bill as a panacea. “They don’t always understand the business.”
NYPIRG has released surveys touting the benefits of the bottle bill.
One of these surveys suggests that businesses have benefited from the expansion of the bottle bill. According to the survey, 68 percent of people who return bottles and cans at supermarkets were also shopping there, and that more than half said that they had chosen to shop there because of the convenience of its bottle return facilities.
Haight said if the state wants to generate more revenue for the Environmental Protection Fund through the bottle bill, it should expand the bill and allow more types of bottles to be recycled.
“There are better solutions out there,” she said.