PayPal Sued For Honey’s Affiliate Sales Claim

Digital payments PayPal is facing two other class action lawsuits over claims that its browser extension called Honey improperly claimed affiliate commissions for sales that it did not generate.

The lawsuits which were filed in Northern California this week challenged Honey’s practice of taking credit for online sales even when it did not provide discounts or referrals, which could harm content creators who rely on affiliate marketing. These followed a $535-million lawsuit filed by an Asian American woman over racial bias allegations that cost her venture company millions of dollars.

Honey takes the last click

Affiliate marketing, which accounts for about 20 percent of US e-commerce revenue, allows content creators like YouTubers to earn commissions for driving sales.

Honey’s extension works by searching for coupons, but plaintiffs argued that Honey sometimes takes the “last click” in the purchasing process, thereby claiming commissions for sales initiated by others.

Honey defended its practices, citing the industry-standard “last-click attribution,” where the final link clicked by a consumer earns the referral credit.

A spokesperson emphasized that Honey follows such rules and helps both shoppers and merchants by reducing cart abandonment and comparison shopping.

However, the plaintiffs claimed that Honey unfairly benefitted from sales it didn’t contribute to.

Devin Stone, a lawyer representing one of the plaintiffs, argued that Honey misled retailers by claiming to have driven a sale when it did not play an active role.

Legal experts suggested that it may be difficult for creators to prove Honey’s practices are unlawful, as last-click attribution is widely accepted in affiliate marketing.

Robert Freund, an e-commerce lawyer, noted that while creators may feel the system is unfair, proving its illegality could be challenging.

Despite potential legal hurdles, the lawsuits could pressure Honey to modify its affiliate practices.

The company, which partners with many influencers for its marketing, risks alienating a key group of creators who could view the current system as detrimental to their businesses.

The controversy began in December when YouTuber MegaLag posted a critical video about Honey, followed by support from other creators like Marques Brownlee and Hank Green.

The suits sought damages and changes to Honey’s affiliate attribution practices. If the cases are certified as class actions, other affected creators could join the lawsuits.