Smugglers still cashing in on Michigan can refund

Published on NewsOK Modified: February 23, 2013 at 6:45 pm •  Published: February 23, 2013
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Hautala said he lost about $25,000 last year picking up more returned containers than he delivered. He said his company will recover some of that money from distributors who sell more containers than they pick up.

In 2008, Michigan passed laws aimed at cracking down on bottle fraud. One of the primary components required manufacturers to place a special mark on Michigan cans and bottles and said those containers could only be sold in Michigan or other states that have deposit laws.

A report the Department of Treasury delivered to Michigan lawmakers last fall estimated that the technology may have helped reduce redemptions of out-of-state containers by nearly 4 percent. But that reduction could also come from decline in sales, the report said.

As containers were given Michigan-specific marks, vending machines used in stores to count the cans and bottles were formatted with new technology to read the mark and reject cans that come in from across the border.

But Madden told the committee that many retailers have not yet taken advantage of the technology. She said while the state has provided funding for business to pay for the $5,000 machine upgrade, many "just refuse." If a store has an older model machine, they might have to shell out big bucks for a brand new machine that is compatible with the new technology, she said.

Hautala said only four machines are in the two counties his company serves.

And the machines are not "100 percent fool-proof," Nichols said. If a person repeatedly puts an out-of-state can into the machine, it will often accept it, he said.

Michigan is not alone in its fight against bottle fraud. Mark Oldfield, spokesman for California's Department of Resources Recycling and Recovery, said the state, which gives a 5-cent refund for most containers and 10 cents for those more than 24 ounces, is losing about $30 million to $50 million a year from redeeming out-of-state cans. The state's redemption rate for the first six months of 2012 was 87 percent.

Oldfield said a new law in California this year requires people who bring in more than 25 pounds of aluminum or plastic, or more than 100 pounds of glass, to report the source and the destination of the material to the state. Border patrol stations along the major highways near the border also gather license plate numbers and information of vehicles seen bringing in cans and bottles.

Despite their best efforts to clamp down on fraudulent bottles, a federal lawsuit may shake things up even more. In 2012, a federal appeals court in Cincinnati struck down the Michigan law that makes beverage companies put a special mark on cans sold in the state. It said the Michigan law is illegally affecting interstate commerce by dictating where cans can be distributed.

Joy Yearout, spokeswoman for Michigan Attorney General Bill Schuette, said the office has requested a stay on the ruling and plans to file a petition with the U.S. Supreme Court in April.