YouTuber LegalEagle sues PayPal over ‘sleeping leech’ Honey extension

A new lawsuit alleges that the PayPal-owned browser extension Honey is cheating creators out of money.

Honey, which PayPal acquired for $4 billion in 2019, works by automatically presenting users with relevant coupon codes as they shop. However, in a video posted last month, YouTuber MegaLag described Honey as a “scam” that’s “stealing money from influencers.”

Among other accusations, MegaLag said that if a YouTuber or other creator promotes a product through an affiliate link, if the viewer has installed Honey, the extension will surreptitiously substitute its own link when the viewer makes a purchase — even if Honey didn’t provide any discounts. That means Honey, not the creator, receives the affiliate revenue for the transaction. 

Now Devin Stone, a Washington, D.C.-based lawyer who posts videos on his popular LegalEagle YouTube channel, has filed a lawsuit against PayPal, claiming that the company “systematically diverts commissions from rightful earners, undermining the affiliate marketing system.”

“Adding to the irony, 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 said in his lawsuit.

TechCrunch has reached out to PayPal for comment. The company shared a statement with The Verge saying it disputes the allegations and will defend itself “vigorously,” and adding that “Honey follows industry rules and practices, including last-click attribution” (an advertising attribution system where the final touchpoint gets all the credit for a purchase).

Naturally, Stone also published a video about the lawsuit, which also emphasized Honey’s marketing efforts, in which creators promoted the browser extension to their audiences — and once those audiences installed it, Stone said it was like a “sleeping leech” in their browsers, “waiting for the viewer to conduct a transaction.”

“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 said.

Stone added that he’s seeking class action status for the lawsuit and looking for other creators to join.