A month after a viral video claimed to expose the “hidden truth” about a coupon browser extension and how it really worked, online influencers have been keeping the courts busy. They’ve filed more than two dozen lawsuits so far against four coupon providers – the newest of them being RetailMeNot.
RetailMeNot launched in the U.S. back in 2009 and once described itself as “the world’s largest marketplace for digital offers.” Today, with competition from the likes of PayPal’s Honey, Capital One Shopping and Microsoft Shopping, RetailMeNot refers to itself slightly more modestly as “a leading savings destination.”
And now, along with the other competitors mentioned above, it can refer to itself as a defendant.
YouTubers Edgar Oganesyan and Matthew Ely, owners of the technology-oriented YouTube channels TechSource and ToastyBros, respectively, have filed a proposed class-action lawsuit against RetailMeNot. They accuse the coupon company of “wrongfully and surreptitiously stealing their rightfully earned affiliate marketing commissions” and “diverting commissions to itself” when an online shopper uses the RetailMeNot coupon browser extension.
The claims are identical to those made in previous lawsuits against PayPal, Capital One and Microsoft – one of them, against PayPal, filed by Oganesyan and Ely themselves. Through affiliate deals with advertisers, the plaintiffs earn a commission any time a follower clicks on one of their referral links for a product they recommend, and makes a purchase. But if that follower clicks on RetailMeNot’s pop-up to search for coupons before making a purchase, that action causes RetailMeNot to become the referrer and earn any commission instead.
“RetailMeNot is not a ‘party’ to the affiliate marketing strategy, nor does it promote the product,” the plaintiffs argue, “but it swoops in at the last minute to get the ‘last click’ by manipulating cookies to collect commissions which should have been attributed to influencers who did the work to promote the products.”
This is due to what’s known as “last-click attribution,” an affiliate marketing industry standard that states the last affiliate with which a customer interacts before making a purchase, is credited with the sale and earns the commission. Oganesyan and Ely claim RetailMeNot unlawfully takes advantage of this system, and “uses its millions of unwitting subscribers to perpetrate a huge scam against creators.”
RetailMeNot has not responded to a request for comment about the allegations.
Attorney Harry Richt, who specializes in marketing and technology law, says the slew of lawsuits filed in recent weeks tread “new legal ground and could have significant implications for the industry if successful.”
The lawsuits “force us to consider what constitutes ‘unfair acts’ in the digital marketing landscape,” he told Coupons in the News. “Courts will need to carefully balance established industry practices against claims of unjust enrichment and unfair competition. The resolution could potentially reshape how affiliate marketing operates, affecting not just browser extensions but the entire ecosystem.”
There’s a lot of overlap in the cases filed so far. Oganesyan and Ely have sued both RetailMeNot and PayPal. Another plaintiff has sued Capital One and Microsoft, two others have sued Capital One and PayPal, and one has sued all three. In the various cases against PayPal, Capital One and Microsoft, the parties have moved to have the cases designated as related, the first step toward potentially consolidating them into single class actions against each defendant.
That could make them easier to litigate. But the questions they ask the courts to decide, could be anything but easy to answer. “It’s difficult to predict the outcome of these class actions or related litigation due to their unprecedented nature,” Richt said. “If the plaintiffs’ cases are successful, it could indeed force browser extensions to significantly alter their business models.”
Even if the cases are not successful, they raise issues that the industry may be forced to address. “Regardless of the outcome,” Richt said, “these cases emphasize the need for all stakeholders – including brands, cashback tools, and content creators – to come together and establish clearer expectations and practices in affiliate marketing. The industry may need to reevaluate its norms to ensure fair and transparent operations moving forward.”
For now, it’s up to four federal judges considering these twenty-six lawsuits, so far, to determine how to proceed. Eventually, it could be up to the entire industry to determine whether changes need to be made, so everyone who offers you shopping suggestions and savings can share in the rewards.
Image source: RetailMeNot