• Devin Stone, the YouTuber behind LegalEagle, has filed a lawsuit against PayPal over Honey allegedly diverting affiliate commissions from creators.
  • Honey, acquired by PayPal for $4 billion in 2019, is accused of replacing creators' affiliate links with its own, depriving creators of revenue.

Devin Stone, the Washington, D.C.-based lawyer behind the LegalEagle YouTube channel, has filed a lawsuit against PayPal, claiming that the company’s browser extension, Honey, is unfairly diverting commissions from content creators.

The lawsuit accuses PayPal of undermining the affiliate marketing system, allegedly "systematically" stealing revenue from creators who depend on affiliate links for their income.

Honey, acquired by PayPal for $4 billion in 2019, automatically presents users with relevant coupon codes while they shop online. However, YouTuber MegaLag recently called Honey a "scam," accusing it of replacing creators’ affiliate links with its own.

According to MegaLag, if a viewer has installed Honey, the extension surreptitiously substitutes the affiliate link with its own during a purchase, even if Honey did not provide a discount. This results in Honey, not the creator, receiving the affiliate revenue.

In his lawsuit, Stone stated,

“PayPal enlists content creators and influencers to promote the Honey browser extension to their audiences, effectively enabling it to usurp the commissions and other benefits those same creators depend on for income.”

Stone also described Honey’s actions as a “sleeping leech,” waiting for the viewer to make a transaction and stealing future commissions from creators once the extension is installed.

“And thus, forever after, the creator’s future sponsorships and future affiliate relationships and advertisements were devalued now that the creator’s audience was infected,” he added.

PayPal has denied the allegations. In a statement to The Verge, the company stated that

"Honey follows industry rules and practices, including last-click attribution" and intends to "defend itself vigorously."

Stone is seeking class action status for the lawsuit and is calling on other creators to join him.

Edited by Harshajit Sarmah