One online coupon code finder is fighting back. Another has earned a win. And another has given up. Now, the coupon company at the center of the legal case that started it all is finally having its say.
PayPal, the owner of the browser extension Honey, is firing back against dozens of online influencers who filed suit against it earlier this year. They all claimed that Honey “steals credit for sales” by manipulating the affiliate marketing system to its advantage. When online content creators recommend a product, they can earn a commission if that recommendation results in a sale. But if Honey entices a shopper to click on its popup to look for online coupon codes, it then earns the affiliate commission and the original recommender earns nothing.
The plaintiffs call this an unfair and illegal scheme. PayPal calls it the nature of the business.
“This case is an attempt to use the judicial process to stifle competition in the online commerce market,” PayPal has argued in a new motion to have the case dismissed. “Plaintiffs’ central complaint is that Honey and other browser extensions compete with them for commissions in the affiliate marketing industry.” And just because they don’t like the way Honey competes, that’s not a matter for the courts to decide, PayPal stated.
At issue is the affiliate marketing industry’s “last-click” attribution standard, which is followed by most participants. Merchants offer a commission to those who persuade a shopper to make an online purchase via their custom link. If multiple online entities recommend a product, the one who earned a user’s “last click” before making a purchase, earns the full sales commission.
Those who sued PayPal claim that after they recommend a product, Honey uses its popup, which promises to search the internet for coupon codes, to manipulate users into giving Honey the “last click.” Even if no coupons are found for the purchase, Honey still earns the sales commission.
That’s simply the way it works, PayPal argued. “Merchants determine who is entitled to receive credit for qualifying purchases,” its motion to dismiss reads. “Honey does not make the rules; it follows them.” If the plaintiffs don’t like the system, PayPal pointed out, they’re free to partner with merchants who operate differently, or to petition them to “restructure the industry.” Not by “asking the Court to rewrite contracts… to prevent Honey from competing with them.”
And even if there was something wrong with the current system, the plaintiffs offer no proof of having lost any commissions to Honey, only assumptions, PayPal stated.
It’s the most thorough public defense PayPal has offered since a YouTuber sought to expose Honey as “one of the most aggressive, shameless marketing scams of the century.” A video that went viral late last year explained the last-click attribution model, and how Honey allegedly exploited it.
The lawsuits soon followed. Dozens of online content creators sued PayPal. Then many of the same plaintiffs went after other online coupons-and-rewards browser extensions, suing the likes of Capital One, RetailMeNot, Rakuten, Microsoft, Klarna and Ibotta.
Until now, Capital One and Ibotta were the only defendants to have issued detailed defenses. Capital One called the plaintiffs in its case misinformed about “how online shopping (and) the online advertising industry works,” explaining that “it is not ‘stealing’ if a merchant adopts an attribution model that gives a later-in-time publisher credit for a sale.” In Ibotta’s case, it pointed out there is “no statute, court decision, or other source of authority” that governs how commissions should be distributed, leaving the industry free to decide that for itself.
The plaintiff suing Ibotta ended up dropping the case. The cases against the other browser extensions go on – even the one against Microsoft, which essentially addressed the plaintiffs’ complaints by ending the coupon-finding tool altogether in its Microsoft Shopping feature.
As the only one to be accused in a viral video of being an outright “scam,” and the first to be sued over it, Honey is at the center of the most closely-watched case. Now that PayPal has had its say, it will be up to a judge to decide whether Honey really is the “scam of the century” – or whether the high-profile lawsuit against it is.
Image source: PayPal Honey
