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Comment by nkurz | Hacker News Reader

There is fear that some significant portion of the recent increase in redemption rate may be due to fraud. Oregon recently increased the redemption from 5 cents to 10 cents, but the neighboring state of Washington still does not have a deposit. This creates an incentive for people to scavenge bottles in Washington and return them across the border in Oregon.

Here's a recent article about the problem: "Oregon senator to introduce bill to thwart return of bottles, cans bought in Washington: She says grocery stores ‘drowning’ in out-of-state containers"

https://www.columbian.com/news/2018/dec/04/oregon-senator-to...

Has anyone seen more exact numbers that would either support or refute this?

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I wouldn’t be surprised if there is some spillover from Washington or California, but I doubt that it can be an incredibly high percentage.

Frankly, I think it’s better that these cans and bottles are being recycled, fraudulently or otherwise. I’m sure it hurts the Oregon pocketbook, but according to the article, the cost of the program is only six figures. This is only a problem (cost wise) when redemption is over 100%.

> I wouldn’t be surprised if there is some spillover from Washington or California, but I doubt that it can be an incredibly high percentage.

Why do you doubt that it could be a high percentage? A huge number of folks live in Vancouver across the OR/WA border and commute into Portland every day, and do their shopping in OR for the lack of sales tax.

The border cities of Washington, Clark county (Vancouver) and Tri Cities, only account for ~600k people compared to ~2M in Portland and 4M in Oregon overall [some quick searching]. I would expect the fraud rate coming from Washington's central and northern cities to be much lower. By headcount alone, the Washington contribution is maybe conservatively 25%, even if you think those urban areas are recycling at a higher rate than Oregon's rural areas.

You just said it. They do their shopping in Oregon. So they probably buy the bottles their tax free. Save ten cents on tax, spend it on deposit. It's a wash to the consumer.

> You just said it. They do their shopping in Oregon.

Which makes it quite convenient for them to “return” bottles gathered from other people who shop near where the returner loves in WA to Oregon for the deposit.

You seem to be only considering people returning bottles purchased for their own consumption.

The lack of sales tax doesn't really affect whether or not they buy considerable number of cans/bottles in OR - I just meant to say that it is _very common_ for Vancouver folks to shop for general goods after work in Portland, or drive into Portland area on the weekends. If they are saving bottles/cans it's very likely not an extra trip for them.

Many people in Oregon just give away their cans to the street. I imagine this is true in Washington as well. If a person collects free cans in Washington, where they're worth less, and brings them to Oregon for a higher return, then they would be gaming the system.

Yes, of course, but there would not be a lot of them.

No, that's not how it works. If you buy cans/bottles in Oregon, you get the bottle tax. Separate from the sales tax.

I think you're misunderstanding parent - Oregon has no sales tax, so the price of cans/bottles will be about the same as Washington, which has no deposit.

It's 10 cents a bottle. Are we really at the point in our society where someone is simultaneously commuting from Vancouver yet is still in such a precarious situation that it's worth it to collect a bunch of bottles to trade them in?

100 bottles is only $10! Think about the amount of effort required for this

A few years back, California's recycling rate for plastic was 104%[0]. It can get pretty high because recyclers, not just individuals, can go across the border for a better rate.

[0]: http://articles.latimes.com/2012/oct/07/local/la-me-can-frau...

Sure, but how many are going to drag there bottles across the border for a few cents, dollars at the most?

You are seriously underestimating the amount of money involved, and what it means to the folks that do it. My neighbor recycles trash bags full of cans at a time and nets 20-40 bucks a bag. He does this a couple of times a month. For very little effort he's making an extra hour or two worth of wages just for taking a bag into recycling. It's extremely minimal work since he does it on his way to/from work, and absolutely a non-trivial gain for him.

There's no doubt some significant overhead to the program, that is likely modeled as being covered in part by the "slippage" of bottles that don't get returned. Fraudulent returns cut into that allowance, even before the redemption rate hits 100%.

Yeah, like building huge dedicated recycling centers. Those aren't cheap. You used to return the bottle/can to the store, who returned them back to the distribution companies when they were dropping off new orders. Now there are huge areas where they got rid of returning to the place of purchase and you have to return them to these large, brand new, dedicated recycling centers. I have no idea why they do that, or who pays for that. It seemed logical to return them utilizing the existing infrastructure (stores) that were selling the products.

Edit: more info.

One thing about the recycling centers though - you have to have an account, and you have to prove you are an OR resident to use them. I imagine that cuts down on a lot of out of state cans.

Map: https://www.google.com/search?client=firefox-b-1-ab&q=portla...

More info on the recycling centers: https://www.bottledropcenters.com/

When I worked at Safeway or WalMart here in OR, the can returns were nightmares. Extremely dirty, they'd fill up fast, and customers were always in a bad mood when they had to wait for me to get the machines working again. Oh, yeah, those machines were horrid. They got jammed all the time.

Oh, and stores would limit what kind of returns they'd accept. So I'd have say, sorry, we don't sell that here so you can't return it here.

So, I'd imagine some of that is why they created the centers. Which, btw, I only just learned about from this topic.... :)

How does the Oregon program "know" if a returned bottle is bona fide or fraudulent (from out of state)? I don't see how substituting units of a fungible quantity, which identical bottles seem to be, can have the consequences you suggest.

If OBRC collects a dime on 2.0 billion bottles per year ($200M deposit revenue), with an assumption that 20% of those will not end up being returned (resulting in $40M in slippage) and has overall annual budget costs of $34M, they are ever so slightly profitable.

Just a small amount of "excess" returns (bottles for which OBRC did not initially collect the dime, but pays out the dime) can push the overall program into the red. In the example above, only a 3% increase in return rate (from 80 to 83%) pushes the program into the red.

You seem to be saying that if the scheme somehow becomes more successful than expected, they stand to go into the red. Maybe so. But this is surely the case whatever source the "excess" or unexpected returns come from.

If you're claiming that the scheme is currently funded in such a way that something like a 3% improvement in return rate (fraudulent or genuine, OBRC can't tell) is a problematic financial event, then I suppose I get it.

The externality argument based on the cost of landfill (made by another commenter) is sensitive to whether the bottles come from out of state.

> How does the Oregon program "know" if a returned bottle is bona fide or fraudulent (from out of state)?

The program doesn't on a per bottle bases, but the effectiveness at dealing with the problem the program aims to solve (local landfilling recyclable containers) is impacted by the substitution; in the context of the function served, imported bottles that would not otherwise be imported are not fungible with local bottles.

If return rate hits 100% then it's a success IMO. Oregan has then successfully ensured that for every bottle used in their state that they also recycle one. Does it matter if it's a non-Oregan bottle?

> Does it matter if it's a non-Oregan bottle?

Insofar as part of the purpose is local waste stream diversion (because landfilling has costs), yes.

It's true that the local cost is coupled with a remote benefit, but remote benefits have less value, ceteris paribus, to the people paying the costs.

And having people drive bottles in from outside states, presumably burning fossil fuels in the process, kinda defeat much of the point behind recycling in the first place.

Someone has to pay for the costs of the program (OBRC program costs are around $34M/yr per a slide deck I found and seem to currently be funded by slippage in return rate).

If Oregon returns hit 100%, leaving no funds to pay for the program, the program isn't likely to continue without state taxpayer funding (currently, it's funded from the program itself and not the state's taxpayers).

The slide deck at https://www.obrc.com/Content/Reports/OBRC%20Quarterly%20Repo... says $34M/year, so agrees with you.

As a theoretical point, even with a 100% return rate, it's still possible to make money on the float. Buy a 12-pack, deposit $1.20, return 1 week later, get $1.20 back, but in the meanwhile that buck-and-change could make ~1/50¢ in interest.

The same report says they do about 2 billion containers / year, which at 10¢/container is $200M. In the optimistic case of 1 year between purchase and return, assuming 2% interest, that's $4M. Assuming 1 week, I think it's $100K, so not much.

A more likely income source is the profit from selling relatively clean metal, glass, and PET. That report says 151.0 M Aluminum Cans per quarter. I see numbers around 2¢/can for the metal value, so that's $3M/quarter or call it $10M/year.

So even with 100% return rate, there is still money coming in. Just (as you say) not enough to pay for the program.

FWIW, https://www.obrc.com/Content/Reports/OBRC%20Annual%20Report%... says that there was "$25 million" in "Estimated value of 2017 unredeemed deposits". That plus the Al can value is easily enough to pay for the program.

Great points that I hadn’t considered. Thanks!

It's spelled "Oregon" btw.

In Iowa the stores read the bar code and will not accept a bottle/can if it couldn't have been bought at that store. One side effect is nobody buys store brand as it has to go back to that store, while "coke" can be returned to any store.

If there really was a problem I'd expect to see a different barcode for cans/bottles sold in Oregon vs other states.

Years ago we did it by barcode. It sounds like there is some reason that does not work now, but back when I would bother to return soda cans, the machine that collected/crushed them would scan the barcode and reject the out-of-state ones.

This would be a problem if you crush the cans to save space. It makes transport of the empties a much bigger hassle if you can't crush them.

There is a mark on the bottom of the bottles.

When it's not redeemed in one state, it's cheap to obtain in that state. Folks would fill up Trucks or van, drive across a state and obtain hundreds of tax free dollars a day. This happened in Michigan, folks drove over from Ohio.

Portland borders Washington, but not California. It makes no sense for any there to be spillover from California and with the large homeless population who can regularly be seen scavanging public dumpsters, I don't see any reason why they wouldn't also check Vancouver, WA which is part of the Portland metro area.

I don’t see the “6 figure annual cost” anywhere in that article and this report says $34M/yr: https://www.obrc.com/Content/Reports/OBRC%20Quarterly%20Repo...

> I wouldn’t be surprised if there is some spillover from Washington or California

Probably not systematically from CA, which also has a bottle deposit (though there may be some arbitrage opportunity since the CRV is, IIRC, 5¢ for some containers that have a 10¢ deposit on Oregon.)

There's a bigger reason why there's unlikely to be much spillover from CA: geography. The CA/OR border is in the middle of the Siskiyou Mountains. There are few major cities near the border -- the closest pair are Yreka, CA and Ashland, OR, and they're 40-50 miles apart.

As others have pointed out, Michigan has had a 10 cent deposit since 1978 and consistently has redemption rates over 90%, even hitting 94.2% in 2014: http://www.bottlebill.org/legislation/usa/michigan.htm

The fear that these rates were the product of fraud even lead to amendments to the recycling act in 2008, namely adding a state-specific mark to bottles. Yet the redemption rate remains over 90%.

See also: Seinfeld episode "The Bottle Deposit".

https://en.wikipedia.org/wiki/The_Bottle_Deposit

https://www.youtube.com/watch?v=x1blsZxXDCU

The transportation costs kill ya!

The large grocery stores in Oregon are required to accept up to 144 bottles per person per day (or $14.40/person/store/day in potential profit). At that price it doesn't really seem to be worth it to do that sort of arbitrage.

It's very easy to go over this limit by simply going to a different checkout line, or going through the same line multiple times.

At least that's how I got over the limit in Michigan when I was in college. We used to save all our cans and bottles for the whole year and return them all at once.

You're not going to make much profit off the effort though, unless you value your time at $0.

You wouldn't defraud the system by taking redeeming at someone else's store. You'd open your own version of something like https://www.bottledropcenters.com/.

I'm guessing that redemption centers need to put up a hefty bond. To get enough volume of cans to make it even approaching worth your time to open a redemption center you'd need to collect tens of thousands of bottles and cans from hundreds or thousands of people, who would all want to be compensated in some way, that would be difficult to hide for very long.

You'd collect them from a recycling facility the next state over, which you also own or work with in some capacity (and where there's no deposit). Owning the redemption center means no one blinks an eye when you drive up with a truck full of bottles, especially as you've mixed them up with actual redemptions.

This is not hypothetical stuff. Large scale operations have already been caught:

https://www.usatoday.com/story/news/2018/12/03/recycling-smu...

> Three suspects were arrested in a case that resulted in fraudulent payouts totaling $16.1 million over three years, the California Department of Resources Recycling and Recovery reported Monday.

> Authorities said the Bustillos' trucking operation existed entirely to smuggle cans and bottles into California.

Random checks of out-of-state mail trucks should certainly be in order. :) https://en.wikipedia.org/wiki/The_Bottle_Deposit

But only on mother's day!

Such a good episode: https://www.youtube.com/watch?v=bGJZcHgqX1g

I live in Portland, there's certainly not anyone drowning in bottles. There are long lines at the redemption centers because cans and bottles need to be put into the machines one at a time and we have a fairly large homeless population that uses them for an income. That's about the only issue I've seen so far.

As an Oregon resident I actually feel like those bottles getting redeemed from out-of-state is better off than them going into a landfill. I think we can take whatever the offset to revenue is.

Is this still even a thing? Michigan also has a 10 cent deposit, and fraud was an issue in the 90's, but it's been fixed since. Grocery stores use automated bottle scanners to check barcodes. I'm not sure how you could "fool" a machine that needs a barcode for each physical bottle return.

It does check the barcode, but a generic coke bottle could have been purchased in Washington and returned across the boarder for 10 cents.

That’s a valid bottle, but an abuse of the system because they are getting 10 cents from Oregon that was never paid. The point of the program is you pay 10 cents and get it back if you recycle.

> The point of the program is you pay 10 cents and get it back if you recycle.

The point of program is to recycle bottles. Exchanging money is means to an end not an end itself.

And to reduce litter as well.

Someone paid those 10 cents, though... And then didn't return the bottle.

As long as returns are <100%, I don't think it matters who bought the bottle.

They didn't pay the 10 cents if they bought the bottle in a state with a smaller deposit.

Someone else did though, so the 10 cents is paid in full.

Well, sorta.

The cost is covered because many bottle deposits end up going unclaimed.

But nobody paid 10 cents for that bottle.

So who's being harmed? The point is to get bottles to be recycled and they're getting recycled.

Michigan's bottle return isn't really a good system considering most of the machines will always reject bottles from other store brands, and will often reject less popular bottles/cans from the same store. Plus, it only applies to carbonated drinks.

Exactly what I was going to write. There is no import of cans from Ohio to Michigan, because it doesn't work.

> I'm not sure how you could "fool" a machine that needs a barcode for each physical bottle return.

You photocopy a sheet of barcodes and stick them on the bottles.

Some machines you can even hold the barcode in your hand, and put the bottle in, then you can put anything in and reuse the barcode endlessly.

You mean print proper barcode and put it over original one?

For $0.10 a can, I don't see this strategy being profitable.

A sheet of paper can easily hold 60 barcodes, and costs about 5 cents to copy. A pack of gluesticks is $1 and can handle hundreds of bottles.

Okay, so you're down to $.0499 (aprox) per bottle. That's not taking into account the time needed to do this, or the time needed to collect the bottles, or the gas/equipment needed to haul the bottles.

This sounds like a dozens of dollars level scam, not millions.

$0.05 and 10 seconds per bottle is $18/hour, which is decent. (Although that doesn't account for actually getting the bottle, or travel, or redeeming the bottle which isn't very fast.)

> not millions

No, not individually, but if tons of people are doing it all day, it adds up.

And bumping the fee to $0.10 makes it $36/hour which is very attractive to someone who doesn't have a job.

Again, the actual earnings are lower, but I think it's a realistic type of fraud.

This plan doesn't scale. You can't bump the fee to $.10 an hour because there's fixed costs associated with this specific plan (paper, glue, transportation, etc).

There is a viable way to do recycling fraud, but DIY stickers isn't it.

And time is free. Just get prisoners to do it. And then you have to ship the bottles to them, of course, unload, and load them back.

Isn't it fundamentally flawed though to assume that the people in the neighboring state are better than the people in your state at redeeming the deposits? The incentives are the same to people in both states and I assume only people living close to the border would be so incentivized while in the state with the redemption policy, it applies to people anywhere in the state. It feels like a sort of fear-mongering...

Homegrown Oregonian here: it's common knowledge that to maximize profit against the system, a person should work in Vancouver WA where cost of living is low and state income tax doesn't exist, and then shop in Oregon where sales tax doesn't exist. The bottle return scheme wouldn't surprise me either, as the PNW is profoundly supportive of recycling.

Those discrepancies should already be accounted for by the entities concerned, right? Vancouver WA employers should be able to pay a lower tax-free salary to match the net of an Oregon tax-burdened salary, and Oregon retailers should be able to charge a higher tax-free price to match a WA tax-inclusive price.

Maybe they don't in practice because consumers don't rationally consider the net numbers, but theoretically they should.

Then force in-state distributors to use packaging with Oregon specific UPCs. I have mixed NJ/NY bottles that I redeem in NY. Some but not all NJ bottles will be recognized by the machines.

Is this a problem?

100% of deposits have been paid for by people. If someone else returns their bottle and the deposit payer can't be bothered, that's a win win surely.

No. They're not paid if the buyer is in a state that doesn't have a bottle deposit.

No...? What?

I get that Washington bottle buyer hasn't paid a deposit. But if Oregon bottle buyer has paid a deposit for a bottle, but chooses not to recycle it, there is a deposit that has been paid, but not claimed. What is the problem with the Washington bottle buyer returning their bottle in return for the deposit back? A bottle is returned, which is surely the aim of the deposit. The return rate is below 100% so there aren't unfunded deposits.

I think the usual argument is that the program costs something to run, and was designed with the assumption that returns would not actually be 100%. Any returns beyond the planned level mean that the program is underfunded, and thus potentially unsustainable. It's also generally considered bad for illegal activity to be allowed to continue.

Separately, it's not clear the bottles illegally being returned for deposit are increasing the recycling rate. The article I linked suggests that they are being scavenged from recycling bins, and that (possibly as a result) collected glass recycling in an Oregon-adjacent county in Washington was down 9% after the deposit went up.

Ah, I understand. You're assuming the deposits are fungible. I wasn't.

I guess Oregon is pretty close to finding out what happens when the return rate hits 100.1%; that would be interesting.

Michigan has had a 10 cent deposit for decades and fraud isn't an issue.

There's even a whole Seinfeld episode about why it doesn't work.

as long as the redemption rate is below 100%, then it doesn't really matter. The deposit isn't a dime taped to the inside of the can/bottle...

I don't see why one would conclude it's fraud. Michigan's bottle deposit rate has been 90%+ consistently with a 10 cent deposit.

Fraud from one perspective, and makes the “percent” numbers unreliable perhaps, but it still means people are incentivized to recycle more.

I had to laugh at myself, because my first thought was that it's related to the efforts of the swelling numbers of the homeless. That's basically a joke out of thin air mind you, not a "statement," so please don't bother refuting or confirming.

One thing's for sure -- and this was discussed when China first reneged on recycling the plastics: Commingled recycling at the curb has been a disaster. In my opinion, predictably so. I remember being surprised when it first began, to think that it could be economical or efficient to have to separate the streams further downstream. Turns out I was right.

Sorting and separating isn't that hard, and people would've learned and mastered it by now, if they'd been required to do it. Contrary to the hope, if you coddle people they will not show their appreciation by meeting the new, lower minimum expected of them; they will continue to push the bar even lower.

I'll anecdotally contribute in agreement. I live in Portland and put all my returnables at the curb with recycling. Not worth driving to a return center to get $2 a month. The bottles are usually gone by 6am when I wake up.

Some local breweries are moving to reusable bottles that are washed and used many timees before recycling. We're building a washing plant in PDX this year to grow the program.

Seriously. And in Portland we exasperated the issue by limiting garbage to once every 2 weeks. So people throw trash in the recycling containers. And that makes the recycling near useless.

Specifically, the Portland, OR metro area includes Vancouver, WA; they are separated only by a river and two very congested interstates. Additionally, there are recycling centers in the Jantzen Beach region, sandwiched between Portland and Vancouver on the OR side.

You overload your inventory and you blow your margins on gasoline. It doesn't work!

> and discovered that others in his neighborhood also reported having their recycling bins rummaged through in pursuit of bottles and cans.

Yea, I'm in Oregon, and this happens to me too. Honestly, who cares? What they are "stealing" (lol) is being recycled. If this senator cared enough, he would take his bottles/cans to the store and get credit for it. The point is, he doesn't care that much, but somehow feels entitled to something he doesn't care about.

The issue is rarely that people go rummaging through the bins. The issue is more often that the people who go rummaging through the bins do so in a way that involves pulling out all the contents, dumping it on the street or curb, and then leaving without cleaning up.

There's a related issue where the residents don't always trust that the salvagers will content themselves solely to collecting redeemable cans.

"Drowning"? Are people dying? Are these grocery stores going out of business?

What's the real fear here? That this Senator hasn't had her name in the papers in a while?

I might have to write her about this because that's so ridiculous. I would've expected that sort of hyperbole from a Vancouver Republican.

Seems fine to me, the state should write off the cost of any """fraud""" as combating the negative externalities of plastic bottle production.

I thought someone ran the numbers, and it just wasn't worthwhile. Maybe that was from NY?

> may be due to fraud

You mean they're 3d printing fake bottles? No?

Oh, did they buy their own injection molding equipment and producing bottles? No?

Oh, so they're gathering corporate trash and returning it? And you call _that_ fraud? Uh huh. Sounds like the bottle return is doing a hell of a job.

Can you please be a little bit less cranky? The biggest issue is that we don't stand to learn anything by comments like these.

https://news.ycombinator.com/newsguidelines.html

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