States address UBC fraud as legitimate yards suffer

Mar 31, 2011 | 07:00 PM | Sean Davidson

In the past few months, state bottle bills have drawn much media attention in Iowa, Maine, Massachusetts, Michigan and Vermont as legislators successfully warded off attempted repeals and introduced bills to expand material collection. However, none raised the burning issue that continues to bedevil legitimate aluminum scrap recyclers: fraud.

Although the five states have yet to witness the blatant abuse of their deposit schemes by fraudsters from surrounding, non-deposit states, scrap dealers in Arizona, Nevada and New Mexico warn of impending doom if corrective action isn’t taken soon.

"Our UBC (used beverage container) collections have dropped 60 percent since illegal profiteers devised a way to scam California’s redemption fund," one Mesa, Ariz.-based recycler said. "We’ve tried to get the local media to raise awareness in an attempt to keep people away from those operations, but have had little success to date. Our collections are still suffering."

A special report by AMM in February showed that a large group of UBC buyers in Arizona had priced traditional scrapyards out of the market and usurped more than half the market during the past 18 months.

During an investigative trip to Arizona, AMM saw dozens of one-man operations buying UBCs at between 90 and 95 cents per pound—46 percent higher than the going dealer rate at the time of 60 to 65 cents for the metallic content in a pound of aluminum cans. In March, the same operators wasted no time in responding to higher aluminum prices, openly advertising rates of $1 to $1.10 per pound, while the country’s largest consumers—Evermore Recycling LLC and Anheuser-Busch InBev SA—were paying between 89 and 91 cents per pound for UBCs. Meanwhile, members of the Institute of Scrap Recycling Industries had pushed their numbers up to around 70 cents per pound for the metallic content, maintaining a 20-cent spread to cover the cost of cleaning, partially processing and baling material.....

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