- Honey is a web browser add-on that advertises finding and applying coupon codes to online shoppers.
- PayPal bought Honey in 2020 for $4 billion.
- YouTube tech journalist MegaLag posted a video on December 21 accusing Honey of defrauding influencers.
- MegaLag accused Honey of violating content creators’ member links, offering limited coupon codes, and publishing dishonest ads.
A YouTube creator is accusing PayPal of fraudulent behavior related to the Honey web browser add-on, which advertises finding and applying coupon codes to online shoppers.
YouTube creator MegaLag posted a video titled, “Honey Influencer Scam Exposed” on December 21 accusing Honey, which is owned by PayPal, of defrauding consumers and influencers by grabbing links that pay influencers for products they promote. promote, offering limited coupon options and posting inaccurate ads.
The 23-minute video, the first in a three-part series, had more than 9.4 million views as of Thursday morning, according to MegaLag. The video ends with what appears to be a teaser for a sequel.
“I wouldn’t be surprised if this ends up being one of the most aggressive and shameless marketing scams of the century,” MegaLag said in the video.
In response to the video, PayPal’s Chief Corporate Affairs and Communications Officer Amy Boniatibus gave the following response to USA TODAY:
“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.”
MegaLag declined to comment when contacted by USA TODAY.
Here’s what you need to know about the allegations made by MegaLag and where they stack up against industry standards.
What is Honey?
Honey is a free browser extension that claims to find coupon codes when shopping online.
Honey was launched in 2012 and PayPal bought it in 2020 for about $4 billion, according to a PayPal news release.
When PayPal bought Honey, PayPal’s news release said the shopping tool served about 17 million monthly active users and helped consumers save about $1 billion a year.
After acquiring Honey, PayPal launched PayPal Rewards, which incentivizes the use of the Honey add-on. PayPal users earn points when they use the browser extension, even if they don’t use any coupons, according to the Honey website. These points can be used to redeem cash, credit on PayPal purchases, or gift cards.
In the video, MegaLag called this rewards program a “lame cashback scheme.”
The creator went on to provide an example of how much money he earned through an affiliate link vs. PayPal Rewards cash back when making the same purchase. MegaLag provided an example completed through Honey Gold, Honey’s previous rewards program used before PayPal bought it.
When he bought a standard NordVPN package (about $95) through his affiliate link, MegaLag reported that he earned about $35 from the sale. When he bought the same package but activated PayPal rewards instead of using his affiliate link, MegaLag reported earning about 89 cents in cash back.
He is not the first creator to speak openly
In the video, MegaLag mentions that after conducting research on Honey, there was virtually no other information on the subject.
However, since the video has gained traction, a clip of YouTube creator Markipiler talking about Honey during a 2020 Twitch stream has resurfaced.
Mark Fischbach (the creator behind Markipiler) didn’t go into too much detail, but he did express his “disbelief” about the shopping tool.
“I think they even offered me (a brand deal) and I said no because I just don’t trust Honey,” Fischbach said on air. “I have a feeling that in a few years there will be the big Honey plot of 2022.”
A day after MegaLag’s video was released, Fischbach reposted his stream clip on X with the comment, “I KNOW!!!”
Affiliate link violation or last click attribution?
In the video, “Honey Influencer Fraud Exposed,” MegaLag accuses Honey of violating affiliate links.
MegaLag sets the following example: If a consumer clicks an affiliate link in the description of a YouTube video, the consumer will be taken to the corresponding website. Without using Honey, if the consumer makes a purchase from that link, the YouTube creator will earn a commission.
Thinking in real-world scenarios, an affiliate link is similar to a salesperson helping a customer in a store. For example, if a department store salesperson helps a customer find and buy a piece of jewelry, the salesperson earns a commission.
If a consumer has the Honey browser add-on installed and accepts a Honey pop-up — whether it’s a coupon offered by the shopping tool or simply a message indicating that Honey has not found any coupons — Honey will earn a commission from the online purchase . The YouTube creator whose affiliate link the customer originally followed will not receive a commission.
This model is called last-click attribution, which gives credit to the last touchpoint a user interacts with before making a purchase. Although there are other types of attribution—such as first click, which provides a commission for the first touchpoint interacted with—last click is considered the industry standard.
In the video, MegaLag claims that Honey is “exploiting” last click attribution. When it comes to content creator vs. content creator, MegaLag says last click attribution is usually fair, but when it’s content creator vs. Honey, “there’s no real competition.”
“Honey shows up right at the end of your purchase journey, virtually guaranteeing they’ll earn that last click,” MegaLag says in the video. “They, of course, know this and do everything they can to get the last click. Even when there are no coupon codes to offer.”
Another industry standard when it comes to affiliate marketing is the no-holds-barred policy. This policy, enforced by host sites, in this case a retailer, requires browser extensions to comply with affiliate marketing. If a retailer uses a hold policy, extensions like Honey can’t ask for credit, even if they’re the last point of contact, according to Wildfire, a fintech company that offers white-label refund services.
In response to MegaLag’s video, YouTube creator Hank Green released a video, “The Honey Scam and the Hilarious Mess of Affiliate Marketing” on December 25th. In his video, Green discussed how affiliate marketing works in the “small business ecosystem.”
Green said the ecosystem of small business creators looking to make money and attracted to affiliate marketing is “ripe for exploitation.”
“How responsible should creators be for understanding the business models of the companies they do brand deals for?” Green posed in his video. “I’m sure a lot of creators aren’t smart enough or don’t have the time to do that work. The brand deal ecosystem is where, for most creators, most of the money comes from, so it can be really hard to say. no and it can be really easy to try not to think too much about how things work.”
Ultimately, like MegaLag, Green claimed that Honey and PayPal are taking advantage of content creators.
USA TODAY reached out to experts for more context on best practices in the industry.
Where does Honey source the coupons?
MegaLag also accused Honey of offering limited coupon codes, not offering customers all the best options.
In the video, MegaLag said he was often able to find redeemable coupon codes from other shopping tools like RetailMeNot when Honey indicated no coupons could be found.
PayPal’s Bonitatibus told USA TODAY that merchants ultimately decide what coupons are offered to consumers through Honey.
When it comes to finding its coupons, Boniatibus said they are manually collected by the Honey team, sourced from deal networks, available through merchant partnerships, and obtained from users who share codes with Honey.
Previous concerns about advertising
In the video, MegaLag also accused Honey of running dishonest ads by claiming that the shopping tool searches for all available coupon codes, implying that a customer using Honey does not need to search for their coupons.
In 2020, the National Advertising Division opened an investigation into a Honey ad that claimed, “With just a single click, Honey will find any job code on the Internet and apply the best one to your cart,” according to a news of the Better Business Bureau. release
However, Honey informed the National Advertising Division after the investigation was opened that it was in the process of discontinuing the ad for “business reasons,” according to a Better Business Bureau news release. Honey also agreed to permanently discontinue relevant advertising. Thus, the National Advertising Division’s investigation was closed.
Who is MegaLag?
MegaLag is a YouTube creator from New Zealand who had 508,000 subscribers as of Monday afternoon. Self-identified as an investigative tech journalist, the creator, who confirmed to USA TODAY that his first name is Jonathon, is known for his videos that “expose” companies or experiment with various technologies.
Greta Cross is a national trending reporter at USA TODAY. Follow her on X and Instagram @gretalcross. Story idea? Email her at gcross@gannett.com.
