Deposit return scheme for Scotland: summary

How to prevent fraud in the system? (Questions 23 and 24)

There is the possibility that some individuals or groups may seek to commit fraud on the system.

Deliberately attempting to commit fraud could be a criminal activity that could be subject to action by Police Scotland or the system regulator.

Experience from other countries suggests that while fraud may occur, it can be managed and minimised through a number of different measures.

A scheme administered centrally, which requires retailers to report the number of containers they place on the market and monitors the number of deposits reclaimed, will be able to see if too many containers are being returned. This will be a good indicator that fraud is occurring and will allow action to be taken. This approach is taken in most European systems to manage fraud effectively.

The amount of the deposit, combined with the cost of getting around any security measures, will influence how attractive any attempt to defraud the system will be. Zero Waste Scotland modelling has assumed a fraud rate of 1.5% across the examples.

An important decision will be what approach to on-pack labelling to adopt so that both customers and the system know what carries a deposit. There are three options for labelling:

1. No changes to current labelling. This would minimise cost and disruption to industry, as they would not have to have a separate production and distribution system for Scotland. This approach would accept that some containers will be transported from outwith Scotland to be placed into the scheme, which may include deliberate and non-deliberate circumventing of the system. As such, there may be a need for any producer fee (which will be discussed in more detail elsewhere) to be set at a level to compensate for any financial losses through fraud.

2. A specific barcode in the form of a Stock Keeping Unit ( SKU) for containers placed on to the Scottish market that have a deposit attached to them. Such labels would also carry a visual identifier that the product has a deposit attached to it.

3. A high security label using specialised inks for containers included in the system.

We recognise that the decision by the UK Government to introduce a deposit return scheme in England will have an impact on the potential for fraud, particularly if a system is introduced in all parts of the UK. We think that systems across the UK that are compatible in terms of deposit level and labelling could help limit the opportunities for fraud.