PayPal’s Honey browser extension faces legal challenges from content creators who claim the platform diverts affiliate commissions intended for influencers.

Attorney and YouTuber Devin Stone, who maintains a channel called Legal Eagle with 3.5 million subscribers, has filed a class action lawsuit in California against PayPal, alleging Honey interferes with contractual relationships between brands and creators.

“What we think Honey is doing is interjecting itself and replacing or stealing affiliate commissions from creators that sent traffic to an online store. We think it is violative of several different laws,” Stone said in an appearance on The Wall Street Journal’s “The Journal” podcast, hosted by Jessica Mendoza.

The dispute highlights tensions in the affiliate marketing industry, which Mendoza claims is projected to reach $12 billion in U.S. revenue this year and generate over $1 billion for social media creators.

Technical Analysis Reveals Cookie Replacement

YouTuber Megalag, who also appeared on The Journal, noted that he published research in December 2023 demonstrating how Honey’s browser extension overwrites creator affiliate cookies during the checkout process, even when no discounts are offered. 

The Journal’s independent testing confirmed this behavior, finding that clicking Honey’s popup replaced existing affiliate tracking codes.

Gaming content creator Dylan Russell, known as Yub to his 1.6 million subscribers, previously promoted Honey but now expresses concern about the practice. 

“If you click anything on that little window other than the X to close it, Honey gets the credit for that sale,” Russell said on The Journal. “They’re just straight up tricking people into not supporting the creator that they intended to support.”

Julie Van Ullen, Chief Revenue Officer at competitor Rakuten Rewards, explained that “last click attribution” remains the standard practice in affiliate marketing, where commission credit goes to the final referral source before purchase. However, she emphasized the importance of “standing down” – when browser extensions detect and respect existing affiliate relationships.

“If every affiliate publisher continues to follow the gold standard of standing down and respecting the choice that the consumer has made, we will always ensure that the affiliate who deserves credit gets credit,” Van Ullen said on The Journal.

Legal Battle Expands

The litigation has spread beyond Honey to other shopping extensions. Capital One Shopping and Microsoft Shopping face similar allegations, with Capital One stating via email, quoted by Mendoza, that they “disagree with the premise of the complaints.” Microsoft reports they are reviewing the complaint but believe the claims lack merit.

PayPal, which acquired Honey for approximately $4 billion in 2019, maintains that its service provides value by giving customers confidence they’re receiving the best price and returns a significant portion of commissions as cash-back rewards. The company stated it “disagrees with the claims in these lawsuits and looks forward to defending ourselves.”

Stone reported over 1,000 creators have expressed interest in joining the class action. “These are often middle-class people who are providing value to their audiences effectively for free,” he said. “Affiliate links, in particular, tend to be used by a lot of the smaller creators who haven’t yet been able to create a brand deal or sponsorship.”