California Discovers Fraud in E-Waste Program

Published September 4, 2010

The State of California is accusing two persons associated with the Tung Tai electronics and metal recycling company of submitting fraudulent reimbursement claims as part of the state’s e-waste recycling program. State officials have rejected more than a third of Tung Tai’s recycling claims—totaling $1.6 million dollars—and arrested John Chen and Jason Huang.

The arrests highlight ongoing problems with California’s program for recycling electronic waste. As the state seeks to recycle more electronic products, it is unclear just how much fraud is taking place.

Program’s Design Questioned
“It seems interesting that presumably if you are going to make this kind of [current] system for e-waste, that the potential for fraud is pretty evident,” said Arizona State University professor Eric Williams. 

“California is one of the few states that has gone toward the ‘advanced recycling fee’ route in setting up its e-waste program, though a lot of other states make the manufacturers directly responsible. That is, the manufacturers are basically given targets by state governments on what their projected e-waste will be, and then the manufacturers contract out to other firms to manage their projected e-waste. They are saying to the manufacturer, then, that you need to collect such and such e-waste based on some formula we have. There is less corruption in that model,” Williams explained.

Waste Brought Into State
Professor Hilary Nixon at the University of San Jose thinks the problems with California’s e-waste program were likely to occur because the state was one of the first to set up this type of program and did not have the benefit of seeing what does and does not work elsewhere in recycling e-waste. 

“The problems with the program are in terms of the e-waste coming from out-of-state persons who want to get the money that comes from the advanced recycling fees. But this type of fraud is not quite as rampant as some of these original articles have indicated,” Nixon said.

“Is it the best policy?” Nixon asked. “I don’t know one way or another, though most other states looked at extended producer responsibility programs. California really was the frontrunner here, and they went with their advanced recycling fee, which is a relatively expensive program to administer, to monitor, and to manage.”

Thomas Cheplick ([email protected]) writes from Cambridge, Massachusetts.