BAN’s High E-Stewards Fees Amount to ‘Extortion,’ Recycler Says

ST. CHARLES, Mo. -- The Basel Action Network’s e-Stewards certification program for e-waste recyclers is imposing huge fees on participating recycling companies and is penalizing larger companies unfairly, Dan Fuller, president of EPC USA, one such e-Steward, told us in an interview at his shop Thursday. BAN officials responded by saying if Fuller doesn’t like the voluntary e-Stewards program, he’s free to drop out. They also said the fees BAN charges are fair and for the average e-Steward will more than pay for themselves in new business generated from the certification program.

EPC, which describes itself as an IT asset disposition company, logs annual revenue of $30 million, Fuller told us. He said 80 percent of his company’s revenue comes from equipment it refurbishes and sells, 15 percent from services such as data destruction on hard drives and only 5 percent from recycling fees. “BAN’s fee structure isn’t a level playing field,” Fuller said. “It’s based on total revenues, not necessarily revenues for recycling,” which puts a company like EPC at a disadvantage, since most of the company’s sales come from refurbished IT equipment sold to corporations, he said. “That means a company with $1 million in revenues and two guys in a truck can have the same BAN certification we have, but they spend $2,000 a year for it and we have to spend $38,000,” he said.

BAN’s annual fee scale starts at $500 a year for companies generating less than $1 million in annual revenue, all the way up to $90,000 a year for those reporting annual revenue of $85 million and higher. BAN says the fees go toward running and promoting the e-Stewards program, including money spent on investigations and for lawyers. In its latest legal fight, BAN sued the scrap recycling industry, seeking to have it stripped of the trademark, “certified electronics recycler,” so it may use those words to promote e-Stewards without fear of an infringement complaint.

EPC remains committed to BAN’s goals for responsible e-cycling, Fuller said, as it has since it associated with BAN when it went into recycling in 2004. But since deciding to put in place the e-Stewards program, BAN has done “an about-face,” he said. “I'm not a huge supporter of what BAN has become,” he said. “Three years ago BAN was funded by charities and grants with the same initiatives they have now -- no offshore dumping and making sure equipment is processed properly. But now they've gone to an extreme fee structure for their members to become certified, and they pretty much hold you hostage."

The costs to become an e-Steward involve more than the initial fee, Fuller said, saying BAN doesn’t understand the financial toll of certification on recyclers. “They come up with ideas and initiatives and then don’t realize the cost of imposing those initiatives on their people,” he said. The first step in the program is to become ISO 14001-certified, which EPC just completed, Fuller said, and the cost to remain an e-Steward could run the company $100,000 per year. “There’s a series of certifications we have to go through with outside contractors and auditors, and those guys are not cheap,” he said, saying EPC has to pick up costs including airfare, hotel, and food. “You pay them an exorbitant fee and they come in and review the work you've done,” he said. In addition, EPC has had to hire a full-time employee to handle requirements of ISO and BAN processing and certification, Fuller said.

Fuller agrees that something needed to be done to certify e-cycling efforts because people weren’t complying with BAN regulations. Before e-Stewards, there was no formal certification program or formal due diligence, he said. “Basically you agreed to their rules and regulations and you followed them,” he said, “but that leaves a lot of room for people who just want to sign up and be recognized but don’t really follow the rules, which I'm sure was happening."

EPC has played by the rules, but not all BAN-certified companies have done so, Fuller said. “I don’t disagree with BAN in their message and their goal,” he said. “I think the method in which they're doing it is wrong,” he said. As a BAN supporter from years back, he said, companies like EPC, which have followed the rules and played fair regarding e-cycling, are footing the bill for those who haven’t. “We're basically funding BAN’s expansion,” he said. “I don’t mind a reasonable fee to participate in a program, but when we're looking at the kinds of numbers we're looking at,” he said, “it’s a little out of control."

EPC is still determining what the benefit will be when the company receives its certification next spring. For now, it seems certification is necessary for business, he said. “In almost every quote we do for business with big corporations right now, companies are asking about our position with BAN,” Fuller said. “Even though we don’t like it, we're moving forward with certification."

BAN’s response to Fuller’s objections is that the e-Stewards program is something the market wants and demands. In theory, Fuller supports the idea because the program reinforces what EPC has done for years with regard to responsible recycling. But he calls BAN’s recent methods “extortion.” EPC is a member of six other trade organizations, “and none of the others charge anywhere near the participation fees BAN does,” he said. BAN told Fuller the money is going to ramping up BAN staff in an effort to force corporate American into proper disposal processes, he said. “They want to twist everyone’s arms and make BAN certifications the de facto standard for proper e-waste recycling,” he said. He said BAN also has an enterprise program with companies including Wells Fargo, Bank of America and Samsung, where the companies are paying to be recognized as BAN-certified corporations.

Whether e-Stewards has “the teeth” to enforce the regulations remains to be seen, Fuller said. “I don’t know what enforcement mechanisms they have,” he said. He knows the certification program is detailed and thorough, “but whether that certification is really going to force you to operate a particular way, I don’t know that it does,” he said. “You can say you're doing all these things, provide documentation and reports and everything they're asking for and pay for certification and get it done. But I don’t know how they can enforce what a private business or enterprise does,” he said, saying EPC will continue to operate its business properly regardless of whether it remains part of BAN or not.

EPC hopes increased revenue will offset the costs of certification, Fuller said. “As expenses increase we have to charge higher fees to customers or increase revenues,” he said. The company hasn’t yet raised fees as a result of the BAN initiative. “Even though it’s a big number it isn’t necessarily a big enough number in the scope of our business to cause a direct relationship to raise fees,” he said. BAN believes its program will generate more business for recycling and that it can direct that business to certified companies like EPC. “That could be a valid point,” Fuller said, “but we have not seen BAN bring any business to us yet or recommend any customer, and I don’t know if that’s ever going to happen."

Asked to respond, BAN Executive Director called Fuller’s remarks “shocking.” If Fuller doesn’t like the voluntary e-Stewards program, he’s free to withdraw, Puckett said. Many companies are “lining up to become certified,” he said. “Currently we have 19 in the certification pipeline. If he does not think it provides value to his business he can certainly decline to be a part of the program."

Puckett sent us a promotional mailing BAN distributed to recyclers recently, seeking their participation in e-Stewards. The wording in the mailing suggests that Fuller’s remarks are not the first time BAN has fielded complaints about its fees. “Lately, misinformation has been circulating [claiming] that the costs of this program are ‘exorbitant,’ quoting figures that are wildly off the mark,” it said. “Please take the time to carefully study the costs of becoming certified and our fee scale for securing the e-Stewards brand and benefiting from our marketing efforts. We urge you to draw your own conclusions. We think you'll agree that the benefits more than pay for themselves. In fact, BAN has just begun to harness the resources made possible by the marketing and licensing fee, including the addition of personnel dedicated solely to promoting e-Stewards Recyclers. As the program progresses, so too will our abilities to drive the market to your door.”