One by one, online content creators filed lawsuits, accusing some of the internet’s largest coupon and cash-back sites of stealing from them. And now, one by one, the coupon and cash-back sites are fighting back. And each of them is offering a unique twist in their responses.
This time, the response and the twist are coming from Rakuten. Its response is similar to other defendants, who deny they’re doing anything wrong. The twist is that Rakuten argues it actually offers something of value to its users, while those suing it are only seeking value for themselves.
Rakuten, formerly branded as Ebates, offers a browser extension that “is best known for its cash back,” the company explains, “but it also has a range of coupons and discount codes that offer bonus savings.” Five social media influencers sued the company earlier this year, amid a flurry of similar lawsuits against companies offering other coupon browser extensions like Honey, Capital One Shopping, Microsoft Shopping, RetailMeNot, Klarna and Ibotta.
The influencers all claimed that each of the browser extensions steals sales commissions from them. When they recommend a product to their followers, they earn a commission from the seller if anyone clicks on their affiliate link before making a purchase. But if that buyer subsequently clicks on a browser extension looking for a coupon or cash back, the owner of that browser extension claims the commission and the original referrer gets nothing.
That’s the way it works, Rakuten argues. But it also suggests its business model is simply better, shoppers are better off for engaging with Rakuten instead of the plaintiffs, and the lawsuit’s complaints are merely sour grapes.
In a newly-filed motion to dismiss the complaint, Rakuten lays out its case. “Unlike plaintiffs, Rakuten shares its commissions with the consumers,” it notes pointedly. The company “is transparent as to how it makes its money,” Rakuten goes on to explain. When Rakuten’s offers entice shoppers to pull the trigger on a purchase, Rakuten earns a commission from the merchant, and provides a portion to the shopper. “The consumer chooses to engage with Rakuten because Rakuten offers them something plaintiffs do not – savings on the purchase,” the motion continues.
In contrast, Rakuten suggests that shoppers get nothing of value for clicking on the plaintiffs’ affiliate links. In fact, they may not fully understand that the plaintiffs are being compensated for recommending products to them at all.
So the plaintiffs are lashing out – at the wrong target, Rakuten argues. “Frustrated by losing out to Rakuten’s consumer-friendly practices, plaintiffs have sued Rakuten,” the motion states. “To the extent there is an ‘injustice’ it is as between the merchant and the plaintiffs, and not Rakuten.”
This and the other lawsuits like it center on the “last-click attribution” industry standard, in which the entity that gets the shopper’s last click before they make a purchase, earns any sales commission. Far from being “deceptive,” as the plaintiffs claim, Rakuten says it’s completely transparent about how it operates, and Rakuten users are well aware of that. “By agreeing to cash back, the member is both permitting and expecting” Rakuten to override any earlier affiliate cookies, the company argues, just as a shopper who clicks on another browser extension after clicking on Rakuten’s is informed that “your purchase might be associated with a service other than Rakuten and you might not earn cash back on your purchase.”
Other defendants have made similar arguments, defending their adherence to the last-click attribution model. But of the cases that have been resolved so far, all have resulted in very different outcomes. While denying any wrongdoing, Capital One settled the lawsuit against it last month. Ibotta pushed back forcefully, before the plaintiff in that case ended up dropping their lawsuit. And Microsoft appeared to give in, by ending the coupon-finding tool altogether in its Microsoft Shopping feature.
For now, Rakuten does not appear ready to give up, or settle. And yet it also appears to offer a bit of backhanded sympathy for its accusers. “They struggle with having purportedly engaged in some effort to bring the consumer to the merchant’s site, only to receive nothing for their efforts,” Rakuten states. That’s “because they use an outdated structure that inherently fails to compensate advertisers for their work.” But “rather than bite the hand that feeds them, they have gone after their competitor” instead.
It will be up to the judge to decide whether to grant the motion to dismiss. If he doesn’t, it will be up to the litigants to decide how far to carry their fight.
Image source: Rakuten
