Honey Extension Allows PayPal to ‘Poach’ Influencers’ Sponsorship Sales Commissions, Class Action Lawsuit Claims

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A proposed class action lawsuit claims PayPal has used its Honey browser extension to “poach” sales commissions from social media influencers who do brand deals.

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The 24-page PayPal lawsuit was filed by a content creator who earns commission payments through “affiliate marketing,” a form of online advertising in which social media influencers promote online retailers’ products or services and receive part of each sale generated through their referral links. By way of example, the class action suit explains that when one of the plaintiff’s Instagram followers clicks a hyperlink in a post, they are redirected to the seller’s page. If a purchase is made, the plaintiff earns a commission for that sale, the case says.

The complaint alleges that PayPal has been “systematically stealing” sales commissions from affiliate marketers like the plaintiff for years through Honey, a popular extension that finds and applies promo codes and coupons for shoppers checking out with participating merchants.

According to the filing, online retailers determine whether an influencer is owed commission for a sale using an internet “cookie,” a tracking tag that is placed on the customer’s web browser when they click an affiliate marketer’s referral link.

“The cookie is the Affiliate Marketer’s lifeblood: without it, even if an Affiliate Marketer convinces a user to make a large purchase, the Affiliate Marketer will not be paid,” the suit relays.

The case charges that PayPal’s alleged scheme is “incredibly simple.” When a customer uses PayPal’s Honey extension to find coupons, Honey replaces the affiliate marketer’s cookie with its own, essentially claiming “full credit” and any commission for the sale, the complaint contends.

“Honey does this even where it has not found a coupon for the user at all—the simple act of clicking a button affiliated with Honey will cause Honey to place its own affiliate marketing cookie in the place of the affiliate marketer cookie that actually led the user to the purchase,” the filing asserts.

As the lawsuit tells it, a consumer activating PayPal Rewards to get cash back at checkout will similarly result in the substitution of an affiliate marketer’s cookie with PayPal’s.

The suit alleges that PayPal’s practice of “swooping in at checkout” is unlawful and has deprived affiliate marketers of rightfully earned sales commissions.

The lawsuit looks to represent any United States-based affiliate marketers whose commissions from e-commerce merchants within the country were diverted to PayPal as a result of the Honey browser extension.

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