A YouTube influencer has accused PayPal of deceitful practices regarding Honey, a browser extension that helps users find and apply online coupons.

The creator, known as MegaLag, released a video titled “Exposing the Honey Influencer Scam” on December 21, asserting that Honey, owned by PayPal, misleads consumers as well as influencers by hijacking their affiliate links, providing limited coupon choices, and airing misleading advertisements.

This 23-minute video, part of a three-part series, reportedly garnered over 9.4 million views by Thursday morning and hints at a follow-up conclusion.

“I wouldn’t be surprised if this turns out to be one of the most ruthless, shameless marketing scams of the century,” MegaLag commented in the video.

In reaction to the video, Amy Bonitatibus, PayPal’s Chief Corporate Affairs and Communications Officer, provided the following statement to YSL News:

“Honey is offered for free and provides millions of online shoppers with ways to save on their purchases. The extension aids merchants in minimizing cart abandonment while boosting sales conversions. Honey adheres to industry regulations and practices, including last-click attribution.”

MegaLag declined to comment when approached by YSL News.

Here’s a breakdown of the allegations made by MegaLag and how they compare with industry standards.

What is Honey?

Honey is a complimentary browser extension designed to find coupon codes during the checkout process while shopping online.

When PayPal took over Honey, they announced that the tool was serving roughly 17 million active users monthly and helping them save around $1 billion per year.

After the acquisition, PayPal introduced PayPal Rewards, which encourages the use of the Honey extension. Users can earn points through Honey, even if they don’t use any coupons, according to information on the Honey website. These points can then be redeemed for cashback, PayPal shopping credit, or gift cards.

In the video, MegaLag criticized this rewards system as a “poor cashback scheme.”

He went on to compare his earnings from an affiliate link to those from PayPal Rewards while making a similar purchase. He illustrated this using what Honey called its old rewards program, Honey Gold, prior to PayPal’s acquisition.

For instance, after purchasing a NordVPN standard package, priced around $95, through his affiliate link, MegaLag claimed to have earned about $35. However, when he chose to go through PayPal Rewards instead, he ended up with just 89 cents in cashback.

Previous Creators Have Voiced Concerns

In the video, MegaLag pointed out that his research revealed little existing information about Honey.

Since the video gained popularity, a clip featuring YouTube influencer Markipiler discussing Honey during a 2020 Twitch stream has resurfaced.

Mark Fischbach, the person behind Markipiler, did not elaborate much but expressed his lack of trust towards the shopping tool.

“I believe they even approached me for a brand deal, which I declined because I just don’t trust Honey,” Fischbach remarked during the stream. “I have a feeling that in a couple of years, we’ll see the great Honey conspiracy of 2022.”

The day after MegaLag’s video went live, Fischbach shared his clip on X with the comment, “I KNEW IT!!!”

Affiliate Links and Last-Click Attribution Issues

In “Exposing the Honey Influencer Scam,” MegaLag claims that Honey is infringing on affiliate links.

MegaLag explains that when a consumer clicks an affiliate link provided in a YouTube video’s description, they are redirected to a specific website. Without using Honey, if the consumer makes a purchase via that link, the YouTuber earns a commission.

To put this in perspective, think of an affiliate link as similar to a salesperson aiding a customer in a store. Just as a salesperson receives commission for helping a customer find a piece of jewelry, so too does an influencer for guiding a customer through an affiliate link.

If the consumer has the Honey extension installed and accepts a pop-up from it, whether it’s for a coupon or just a message indicating no coupons were found, Honey receives a commission from the purchase. In this case, the YouTuber who originally provided the affiliate link doesn’t earn anything.

This practice is known as last-click attribution, which attributes credit to the final interaction a user has before completing a purchase.

Many individuals consider different factors before making a purchase. While there are various attribution models available, such as the first-click system that credits the initial interaction, the last-click model is recognized as the standard in the industry.

In a recent video, MegaLag accused Honey of “taking advantage” of last-click attribution. He explained that while this model is generally fair among content creators, it becomes problematic when juxtaposed with Honey, stating that “there’s no true competition.”

According to MegaLag in the video, “Honey appears just at the end of your buying process, ensuring they capture that last click.” He elaborated that Honey is fully aware of this tactic and does everything possible to secure that final click, even in cases where no coupon codes are available.

An additional common practice in affiliate marketing is the stand-down policy. This regulation, enacted by host sites—like retailers—demands that browser extensions, like Honey, uphold the integrity of affiliate marketing. When a retailer adopts a stand-down policy, Honey cannot claim the last interaction even if it is the final touchpoint, as clarified by Wildfire, which specializes in fintech and provides white-label cashback services.

In reaction to the MegaLag video, Hank Green, another YouTube creator, published his own video titled “The Honey Scam and the Ridiculous Mess of Affiliate Marketing” on December 25. Green explained the workings of affiliate marketing within the context of “the small business ecosystem.”

He noted that the landscape for small business creators seeking to monetize through affiliate marketing is “vulnerable to exploitation.”

“How accountable should creators be for grasping the business models of the brands they collaborate with?” Green questioned. “Many creators likely lack the savvy or time to fully understand these intricate dynamics. The brand partnership landscape is where most creators derive their income, making it challenging to decline offers and easy to overlook the underlying complexities.”

Ultimately, Green, like MegaLag, asserted that both Honey and PayPal are capitalizing on the efforts of content creators.

YSL News has reached out to industry experts for additional insights on best practices.

How does Honey find coupons?

MegaLag also claimed that Honey provides a limited selection of coupon codes, failing to show customers all available options.

MegaLag noted in his video that he frequently uncovered valid coupon codes through other shopping platforms like RetailMeNot, even when Honey reported no coupons were available.

In response, PayPal’s Bonitatibus informed YSL News that it is ultimately up to merchants to decide which coupons are accessible to customers through Honey.

Regarding the sourcing of coupons, Bonitatibus explained that Honey’s team manually collects these codes from deal networks, merchant partnerships, and from users who share their codes with Honey.

Prior Advertising Issues

MegaLag further accused Honey of running misleading ads that suggest the tool finds all available coupon codes, misleading customers into thinking they don’t need to look for their own discounts.

In 2020, the National Advertising Division initiated an investigation into a Honey advertisement that stated, “With just one click, Honey will discover every working code on the internet and apply the best one to your cart,” according to a news release from BBB National Programs.

However, Honey informed the National Advertising Division that it was already in the process of phasing out the advertisement for “business reasons” after the inquiry was initiated. Honey later agreed to permanently discontinue the ads in question, leading to the closure of the investigation.

Who is MegaLag?

MegaLag, a YouTube creator from New Zealand, had approximately 508,000 subscribers as of Monday afternoon. He identifies as a tech investigative journalist and is recognized for his videos that “unveil” corporate practices or test various technologies.

Editor’s note: This story was revised to correct the name of an organization.