Two weeks ago I reported (story #6) on The Honey Influencer Scam.
Quick Recap: MegaLag, a New Zealand YouTuber who creates investigative and technology-focused content, published a video entitled Exposing the Honey Influencer Scam, investigating the money-saving browser extension Honey, which was acquired by PayPal for $4B in January 2020.
Honey works by automatically searching for and applying coupon codes at checkout, helping users save money without having to scour the web themselves for promo codes. However MegaLag revealed that:
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Honey replaces original affiliate tracking cookies with its own by exploiting “last-click attribution,” effectively stealing commissions from content creators.
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The extension selectively displays lower-value discount codes, withholding better deals from users to favor its merchant business partners.
- Despite promises of finding the best online deals, Honey actually collaborates with merchants to control which discounts are shown, limiting consumer savings.
Flash Forward Two Weeks: Content creators have filed two class-action lawsuits against PayPal, alleging that Honey took away some of their affiliate earnings by improperly claiming credit on sales.
- The lawsuits ask the US District Court in Northern California to consider what's fair play in the world of affiliate marketing.
- Plaintiffs allege that Honey would take credit for driving online sales it didn't actually help with, and that even if Honey couldn't find a coupon, it would still get the last click, taking commissions away from a content creator who had linked to the product and earned the sale for the merchant.
- The plaintiffs are seeking damages and injunctive relief, requiring Honey to change its affiliate practices.
- If the lawsuits are certified as class action, other creators could also sign on to the suits.
A spokesperson for PayPal disputed the allegations in the lawsuits and said that the company would defend against them vigorously.
The spokesperson said, “Honey follows industry rules and practices, including last-click attribution, which is widely used across major brands,” and that the extension has helped “millions of shoppers with additional savings on their purchases whenever possible” while helping merchants “reduce cart abandonment and comparison shopping.”
In other PayPal lawsuit news… Nisha Desai, the founder of venture firm Andav Capital, is suing PayPal, alleging that she was excluded from the company's diversity and equity program because she is Asian. In 2020, PayPal made a $530M commitment to support more Black and minority-led businesses in the wake of the Black Lives Matter movement, and Desai claims that she applied to be considered for the fund, but was overlooked because she is Asian, as the program sought to exclusively focus on Black and Hispanic businesses. Desai says that PayPal’s head of public policy and research explicitly told her in a July 2020 meeting that the program gives preference to Black and Hispanic-led firms “over other races and ethnicities, including Asian Americans,” and that “Asian Americans might be minorities, but they’re the wrong kind of minority.”