The YouTube channel GamersNexus has filed a class action lawsuit against PayPal Holding, Inc. for the actions of Honey, a company which PayPal acquired in 2012.
The promise of Honey is that in seconds a user can download the PayPal Honey browser extension, then “shop like normal.” At check out the Honey service with scour the internet for relevant coupon codes for over 30,000 sites and apply them on your behalf at checkout.
The suit alleges “conversion” (an intentional taking of property) based on the class member’s right to referral commissions and fees, “tortious interference with contractual obligations” (a third party, in this case PayPal through Honey, interfering with a contract between other parties) based on the ongoing agreements between class members and sales websites, and violation of North Carolina’s Unfair and Deceptive Trade Practices based on the first two causes of action.
Youtuber MegaLag, known for his social experiments and investigations, posted an exposé into Honey’s practices which has accumulated over 16 million views in less than a month as of this writing. The exposé alleges that the Honey browser extension has wrongfully taken millions of dollars from influencers who were paid to promote the service.
GamersNexus’ Honey lawsuit joins a growing field of litigation that has already been brought against the service by other influencers including: Sam Denby, Elizabeth Zharoff, Sean Cannell, Andru Edwards, Eli Silva, Ashley Gardiner, and Claudia Young. This list is by no means exhaustive of potential litigants. The services were promoted by huge names like Mr. Beast and Linus Sebastian (Linus Tech Tips).
As we all know, we’re constantly being tracked online. Retailers use the information they can gather to most effectively focus their spending on the next sale, and so they want to know the chain of influences that finally brought you to purchase.
In the online shopping world, referral commissions are granted based on a concept called last click attribution. If you used an affiliate link provided by Mr. Beast to shop for something, then the retailer can pay Mr. Beast a commission based on his referral. If you have flirted with buying a product for some time, using multiple affiliate links along the way, the retailer is going to give commission to the last link provider. No one says this is a perfect system, but it’s likely the most cost effective.
The browser extension Honey, owned by PayPal – YouTube, GamersNexus
Here is how the alleged practices worked:
Honey hires an influencer to promote its service. Users then download the extension to their browsers.
When a user goes to one of the shops with which PayPal Honey interfaces, the browser extension searches the internet coupon codes and tries them on the user’s behalf.
At the same time, PayPal Honey injects itself into the purchasing path and becomes the last referrer. This grants them last click attribution.
The PayPal owned coupon service, Honey – Youtube, MegaLag
The retailer then pays out commissions and the influencer whose link the user clicked to do their shopping is no longer getting paid. PayPal is getting it instead. This can happen even if PayPal Honey has not provided a usable coupon for the purchase in question.
In the coming months, the stories of these lawsuits will be ones to watch.
Do you think these YouTubers have a case against PayPal? Will you be interested to see the results of this Honey lawsuit? Sound off in the comments and let us know!
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Finding offers for you seemed shady when Honey first appeared years ago, but now we know its business model. No surprise coming from PayPal who are doing everything they can to steal your money.