Incentives and Recycling Fraud

Incentives matter. Always. And often in ways not intended.

Recycling fraud is draining California cash – Los Angeles Times: Fraud rings bring cans and bottles from other states and illicitly ‘redeem’ deposits that were never paid. And some private recycling centers might claim bigger reimbursements than they deserve.

Just over 8.5 billion recyclable cans were sold in California last year. The number redeemed for a nickel under California’s recycling law: 8.3 billion.

That’s a return rate of nearly 100%.

That kind of success isn’t just impressive, it’s unbelievable. But the recycling rate for certain plastic containers was even higher: 104%.

California’s generous recycling redemption program has led to rampant fraud. Crafty entrepreneurs are driving semi-trailers full of cans from Nevada or Arizona, which don’t have deposit laws, across the border and transforming their cargo into truckfuls of nickels. In addition, recyclers inside the state are claiming redemptions for the same containers several times over, or for containers that never existed.