The legal dispute that started it all is hanging by a thread. But a related dispute that it inspired is ending with what online influencers are calling an “excellent result.”
Capital One, owner of the Capital One Shopping browser extension, has agreed to pay online content creators who claim the coupon-finding tool stole commissions to which they were entitled, whenever a shopper clicked on Capital One’s coupon code finder looking for a deal.
The two sides have revealed details of their class action settlement agreement, first announced back in September. Documents newly filed in federal court describe a plan for Capital One to reimburse its accusers. Any online influencer who believes they lost sales commissions because of Capital One can file a claim entitling them to $20 apiece, or the total amount of commissions they actually lost, whichever is greater.
That’s a very different outcome from earlier litigation targeting Capital One rival PayPal, owner of the competing Honey browser extension. In that case, a judge has given the plaintiffs until next month to revise their complaint, otherwise their lawsuit will be tossed.
In both cases, several YouTubers, bloggers and other online influencers accused the coupon code finders of unfairly manipulating the affiliate marketing system, to cheat those who would otherwise get paid for recommending the purchase of products online.
The issue burst into public view around this time last year, after online content creators complained that Honey was hijacking the commissions they should have gotten for recommending products. Under the business model known as “last-click attribution,” the last referrer who earns an online shopper’s click earns the full sales commission if a purchase is made. By enticing shoppers to click on their coupon finder, the influencers complained that Honey was earning the full commission for sales of products that they had first recommended. So dozens of them subsequently sued PayPal, Capital One and other companies, deriding last-click attribution as a “scam.”
So why does PayPal appear to be prevailing in its case, while Capital One has decided to settle?
The judge in the PayPal case said the plaintiffs had failed to show that actual commissions to which they were specifically entitled were co-opted by Honey, instead making only generalized claims that Honey likely did so. She’s given the plaintiffs until January 5th to file an amended complaint showing actual injury. In contrast, the judge in the Capital One case said the plaintiffs had plausibly shown that Capital One may have claimed commissions on products they had specifically recommended.
That doesn’t necessarily mean that Capital One did anything wrong, only that the case would be allowed to continue toward an eventual trial. Instead, both sides agreed to a settlement, in order to “avoid the costs, risk, and delays associated with continuing this complex and time-consuming litigation.” In addition to paying influencers who claim they lost money, Capital One has agreed to pay up to $4 million in attorney’s fees and payments to settlement class representatives, and to implement measures to ensure that it’s complying with all “rules and policies established by affiliate networks.”
The plaintiffs called the agreement “an excellent result” that will allow Capital One and content creators to compete in the affiliate marketing system “on fairer grounds.”
Capital One, meanwhile, insists it’s done nothing wrong, it says the plaintiffs’ accusations are meritless, and it predicts that few of them are likely to receive any payment as part of the settlement at all.
“Capital One Shopping has not and does not overwrite cookies or steal commissions,” the company insisted in a memorandum to the court. “Instead, the evidence confirmed that Capital One Shopping recognizes and follows longstanding industry rules and standards that govern the payment of commissions.” It criticized the lawsuit as “misguided,” and the plaintiffs as “uninformed” and “oblivious” about how the affiliate marketing industry works, predicting that the plaintiffs would have lost had the case gone to trial.
“But litigation is time-consuming, expensive, and distracting,” Capital One continued. “Reaching a settlement allows Capital One Shopping to put this litigation behind the company so it can focus on its core mission of helping consumers save time and money and helping its advertising partners promote their goods and services.”
Besides, the settlement agreement merely requires Capital One to follow practices it says it’s already following. And the agreement sets a high bar for anyone hoping to get a payout. Claimants must document exactly how much money they would have earned had it not been for Capital One. If they can’t, they can qualify for a flat $20 payment, but only if they can show that one of their tracking codes shows up in Capital One’s data.
And Capital One predicts few will be able to do so. “This case started with 27 self-described ‘creator’ plaintiffs, and it is now down to five,” the company noted, concluding that the rest dropped out because they “had no viable claim against Capital One Shopping.” Aside from “a few rare and isolated” cases in which Capital One might actually owe any influencers any money under the terms of the settlement, if anyone who wants a payout doesn’t get one, “it is because they were not entitled to receive one,” the company said flatly.
The judge still needs to approve the settlement before anyone can submit a claim. Plaintiffs in the Honey case, meanwhile, have only a few weeks to restate their argument before their case is closed for good. And plaintiffs making similar accusations in still-pending lawsuits against other coupon code finders, including RetailMeNot, Rakuten and Klarna, will be watching both cases closely, to find out whether they’re likely to get a payout – or a dismissal.
Image source: Mockupr
