No. They're not paid if the buyer is in a state that doesn't have a bottle deposit.

No...? What?

I get that Washington bottle buyer hasn't paid a deposit. But if Oregon bottle buyer has paid a deposit for a bottle, but chooses not to recycle it, there is a deposit that has been paid, but not claimed. What is the problem with the Washington bottle buyer returning their bottle in return for the deposit back? A bottle is returned, which is surely the aim of the deposit. The return rate is below 100% so there aren't unfunded deposits.

I think the usual argument is that the program costs something to run, and was designed with the assumption that returns would not actually be 100%. Any returns beyond the planned level mean that the program is underfunded, and thus potentially unsustainable. It's also generally considered bad for illegal activity to be allowed to continue.

Separately, it's not clear the bottles illegally being returned for deposit are increasing the recycling rate. The article I linked suggests that they are being scavenged from recycling bins, and that (possibly as a result) collected glass recycling in an Oregon-adjacent county in Washington was down 9% after the deposit went up.

Ah, I understand. You're assuming the deposits are fungible. I wasn't.

I guess Oregon is pretty close to finding out what happens when the return rate hits 100.1%; that would be interesting.

Michigan has had a 10 cent deposit for decades and fraud isn't an issue.

There's even a whole Seinfeld episode about why it doesn't work.

as long as the redemption rate is below 100%, then it doesn't really matter. The deposit isn't a dime taped to the inside of the can/bottle...