Devin Stone of the YouTube Channel Legal Eagle is suing PayPal over the affiliate link practices of its Honey extension that were detailed by fellow YouTuber MegaLag last month, he announced in a video published Friday.
The proposed class action lawsuit was filed December 29th in California’s Northern District Court by Stone’s Eagle Team LLP and several other YouTubers’ businesses. It accuses Honey of intentionally replacing creators’ affiliate links with its own, even if it’s not offering shoppers a benefit, depriving creators of money in the process.
The complaint alleges that PayPal’s practice violates California’s Unfair Competition Law and constitutes interference between creators and their business partners. The plaintiffs are seeking to represent anyone who was part of an affiliate program and had their link “redirected to Paypal as a result of the Honey browser extension.” Class action status has not yet been certified by a court.
Honey operates by offering to find coupon codes through its browser extension. The MegaLag video last month describes how when shoppers interact with its pop-up offers at checkout, it replaces existing affiliate cookies with its own in the background and gets credit for the sale, whether it actually found a coupon or not.
The complaint lists other ways PayPal is allegedly claiming affiliate commissions. That includes offering users rewards through its Honey Gold Program and encouraging them to “Get Rewarded with PayPal,” which prompts them to check out using PayPal.
“We dispute the allegations in the lawsuits, and will defend against them vigorously,” PayPal VP of corporate communications Josh Criscoe said in a statement emailed to The Verge. He added that “Honey follows industry rules and practices, including last-click attribution.”
The lawsuit acknowledges that last-click attribution is a standard practice that credits the most recent affiliate with a sale at checkout. The plaintiffs argue Honey is using that standard practice in a way that’s “deceitful and clandestine,” luring users into clicking useless pop-ups that insert its code. We’ve reached out to PayPal for a statement on the lawsuit.
Lawyers are asking the court to make PayPal pay damages to creators and to permanently forbid it from swapping its own affiliate attribution at checkout. They’ve set up a website inviting other creators to join the lawsuit.
Here is Criscoe’s full statement:
We dispute the allegations in the lawsuits, and will defend against them vigorously. Honey is free to use and provides millions of shoppers with additional savings on their purchases whenever possible. Honey helps merchants reduce cart abandonment and comparison shopping while increasing sales conversion. Honey follows industry rules and practices, including last-click attribution, which is widely used across major brands.
Update January 5th: Added statement from PayPal VP of corporate communications Josh Criscoe.