Two months after their case appeared dead in the water, nearly a dozen online content creators are renewing their fight against the Honey coupon finder. This time, their newly-revised lawsuit centers on “secret tabs” they claim are tricking shoppers, deceiving retailers and stealing from influencers.
The amended, consolidated lawsuit filed this week is far more detailed than the original ones filed individually more than a year ago. The revised version seeks to remedy concerns that led a judge to dismiss the case back in November. The plaintiffs lacked proof that Honey was violating any contracts or agreement, or that it was “stealing” from anyone, the judge ruled, ordering the plaintiffs to either refile, or abandon the case.
They chose to refile. And this time, they say, they have the receipts.
The PayPal-owned Honey browser extension, the plaintiffs argue, manipulates online shoppers’ browsing activity to steal sales commissions from those who recommend products. It does so, they claim, with the use of “secret tabs” opened in shoppers’ browsers that most never notice.
That’s a new argument that prior lawsuits didn’t make.
The new case, like those before it, boils down to who deserves sales commissions when recommending a product to followers. Bloggers, YouTubers and other online content creators often work with affiliate marketing networks, which pay them if a follower buys a product that they recommend. But Honey also helps PayPal earn commissions, under the theory that if a shopper clicks on the Honey extension to find a coupon, that will incentivize them to make a purchase.
And in most cases, with most affiliate marketing networks, only one entity can earn a sales commission – the one that earned a shopper’s “last click.” If an online shopper follows an influencer’s custom link, but then clicks on Honey looking for a coupon, Honey will usually earn any sales commission since it earned the “last click.”
The plaintiffs in this case argue that Honey is deceitful in claiming that last click, co-opting commissions that it does not deserve, through the use of those “secret tabs.”
The lawsuit cites affiliate agreements that define a “last click” as a click on a link that leads to a retailer’s site. That might appear to rule out Honey as being able to claim any sales commissions, since users only click on it once they’re already on a retailer’s site.
But that’s where “secret tabs” allegedly come in. “When a user interacted in any way with the Honey Browser Extension — including simply by clicking the button to tell the purported coupon-finder to go away,” the lawsuit claims, “Honey would create a discrete, hidden tab (the ‘Secret Tab’) that appears and then disappears within seconds. Opening and closing the Secret Tab mimics an actual, legitimate referral, which causes the Affiliate Marketer’s Affiliate ID to be overwritten with PayPal’s.”
In other words, by surreptitiously opening a new tab for just a few seconds, the lawsuit says Honey simulates an external link to the retailer’s website, allowing it to earn the “last click” and any sales commissions – in violation of most affiliate marketing networks’ terms.
To conceal this behavior from affiliate marketing networks who might activate Honey for testing purposes, the plaintiffs claim PayPal avoids opening a secret tab when it detects that a user is an industry professional. If a user is found to be visiting while logged into an affiliate network, or is using an account PayPal believes was set up for testing purposes only, the plaintiffs say Honey will not open a secret tab and will not claim anyone else’s commission, misleading affiliate marketing network testers into believing it’s in full compliance with their terms.
To address the judge’s concerns that they merely believed and assumed Honey’s tactics were causing them to lose sales commissions without actually proving it, the plaintiffs conducted test purchases. When making a purchase via their own affiliate links, they earned a sales commission. But when they clicked on Honey before finalizing an identical purchase, they say Honey overrode their affiliate links and claimed the commission for itself. This, they concluded, proves that PayPal “has stolen at least one affiliate commission from each plaintiff,” and that “there is a 100% likelihood that PayPal used Honey to steal” even more.
The plaintiffs accuse PayPal of fraud, unfair competition, unjust enrichment, interference with contractual relations, and more. They’re seeking damages and an order preventing Honey from continuing to claim sales commissions they say it’s not entitled to.
PayPal has already argued that the plaintiffs have no case, that they’re competitors who simply don’t like the rules of the game, and that if they have any complaint at all, it’s with the affiliate marketing networks who make the rules, not with PayPal itself.
But the plaintiffs insist it’s not as simple as that. “PayPal deliberately coded Honey to trick merchants’ technical systems into attributing a referral to PayPal, when that referral should be attributed to plaintiffs,” they claim. Competitors who play fair simply cannot “game the system” the way PayPal is, they argue.
And now, after the plaintiffs had their case set aside once already, it will be up to the courts to determine whether Honey is the “scam of the century” as its detractors claim – or whether this amended lawsuit is destined for the same fate as the first.
Image source: PayPal
