Paul, I would agree with that tactic if I thought it was something that would improve the business.
I agree with your disagreement (that sounds odd!) -- it very well might detract from business. Maybe I'm turning into a crotchety old fart, but I dont care any more. As I said, if I wouldnt let my boys do it, I wont let my customers do it to me.
Now, I'm not talking about 10 bags of McDs junk out of the back seat - I'm talking about the guy who cleans out his coal furnace once a month and dumps the ashes in my trash cans. The guy who shows up with tied-off hefty bags. Bags of trash from a family picnics, all tied up in the plastic table cloth. 15 (yes that is Fifteen) cases of unopened soda bottles.
By the way, it's rural out here - outside of the borough trash pickup is not "free", ie its not included in the taxes - its privatized, you have to have a contract with one of the trash collection companies. Some people choose to not pay, they burn what they can and dump the rest at local businesses. So it is a known problem, and people like me who say "no" are not really frowned upon, I've actually been complimented for standing up to some of these people.
Ultimately though, I would do it anyway. It is illegal dumping, and I choose not to be taken advantage of.
But I do agree with your perspective - it just ticks me off enough that "I choose this battle."