December 5, 2008
Grand Rapids Press
Michigan legislation aims to end bottle-deposit scams from out of state
Press File PhotoBulk deposit-redemption payments from the state are based on weight.Thirty years after Michigan's landmark bottle bill passed, legislators are plugging a leak that costs the state millions of dollars a year.
Under a measure passed Thursday by the state House, Michigan bottles and cans would be coded to thwart would-be thieves from neighboring states who redeem their empties at stores inside the state line.
Reminiscent of an episode from "Seinfeld," the scams are no joke to distributors who get stuck with the loss.
"It's an enormous problem, to be honest," said Greg O'Niel, president of O.K. Distributors in Niles, which delivers beer along Michigan's southwest border with Indiana.
O'Niel estimated he lost $113,000 the first nine months of this year, thanks to Indiana residents who haul bags of bottles and cans to stores just inside the Michigan line to redeem the 10-cent deposit.
"I am out that money," O'Niel said.
The scheme costs Michigan at least $13 million a year, according to state police, who last year broke up a million-dollar ring involving 13 people and several Detroit-area stores.
The package of bills requiring special markings on deposit beverage containers sold in Michigan had raised opposition from many grocers because it could involve millions in new costs to retailers.
Their bottle and can machines would have to be adapted at an estimated $5,000 each to read the special ink-jet markings and deny refunds for non-deposit containers.
But under a revised version of the bill, retailers are not supposed to pay that cost. Instead, the state is to come up with $1 million for retrofitting about 450 machines along the border with Indiana, Ohio and Wisconsin.
Linda Gobler, president of the Michigan Grocers Association, said the association supports the bill as a big improvement over initial versions of the measure. The bill is supported by Kroger Co., Meijer Inc. and Spartan Stores Inc.
"You have to start somewhere," Gobler said.
"It's bipartisan. At the end of the day, everybody is going to feel more comfortable with this new law. We sure didn't want to see costs imposed on retailers."
Backers of the measure intend to look at the results along the border to see if machines at stores deeper inside the state need to be retrofitted.
Press Photo/Katy BatdorffThese are legal: Ada Township resident Brad Kaminski returns cans and bottles Thursday at Forest Hills Foods in Cascade Township.Still, Jeff VandenBerge, owner of Forest Hills Foods, has reservations about the bill.
"I just don't think it's been very clearly thought out," VandenBerge said.
"I think there's a bigger issue with better solutions than this. I don't know of any other state that has a bottle bill that has done anything like this."
Last year's Detroit bust recalled a 1996 "Seinfeld" episode in which Kramer and Newman learned of Michigan's 10-cent deposit law and headed there with a truckload of 5-cent New York cans, hoping to cash in on the difference.
Investigators alleged millions of non-redeemable out-of-state cans were collected, crushed, packaged in plastic bags and sold at a discount to merchants who then redeemed them. Bulk redemption payments from the state are based on weight.
But VandenBerge said the bill would do nothing to stop that kind of fraud, since those cans never were run through return machines.
"It wasn't like the Kramer episode. There certainly is a problem along the bordering counties.
"I don't know how much of an issue it is in Grand Rapids or Munising or Traverse City."
http://www.mlive.com/grpress/news/index.ssf/2008/12/michigan_aims_to_end_bottleret.html
