> Is this fake recycling happening on any kind of scale?

Unfortunately yes. Here's the article I was thinking about.

https://www.wired.com/story/the-worlds-recycling-is-in-chaos...

If you look for "recycling crisis" or similar on Google News you'll find many more. I kind of knew that recycling wasn't as eco-efficient as it should be, but I had no idea just how bad it has been and it's getting worse. :(