Personal Finance News
The Honey Controversy Explained: Is the Coupon Tool a Scam?
If you’ve gone on YouTube at all recently, chances are you’ve seen thumbnails featuring the Honey logo and likely flames, an appalled face, or maybe just the word “SCAM” written across it. That may be pretty confusing if you’ve missed some big updates about the fairly useful Honey browser extension tool. So what exactly is going on with Honey and why should you care?
First, there are really two main parts to this story (so far) — and who you are will likely impact which half makes you angrier. So, let’s take a look at what’s being accused and what it all means for consumers.
Why are People Calling Honey a Scam? Is It?
What is Honey?
Before we get into the controversy, it’s important to have an overview of what Honey is (or at least claims to be). Put simply, Honey is a free browser extension meant to help consumers find and apply various coupon codes. To do this, the plug-in would pop up at checkout of many e-commerce sites and try some coupon codes it found online. While this didn’t work every time, many consumers did find results.
On top of that, Honey offers a separate feature that was called Honey Gold — but was renamed to PayPal Rewards when the FinTech giant purchased the platform in 2020. With this tool, in addition to applying coupon codes, customers would earn reward points for select purchases.
In the interest of disclosure, while I haven’t done a full review of Honey myself, I have featured it in a couple of roundups comparing cashback and coupon tools. For what it’s worth, in those experiments, Honey was never my personal favorite (I still rock with Rakuten… until some awful expose comes out about them).
Why is this controversy happening now?
The interest in Honey spiked with the release of a video from YouTuber Megalag. Throughout the video, Megalag takes a closer look at how Honey actually works and accuses them of some practices that creators and consumers may not be aware of. Following that video’s release and viral breakout, several creators who have had past relationships with Honey have responded, including many vowing not to work with them in the future.
So why is that? Let’s get into it.
The creator side issues
It’s no secret that one of the ways that creators make money is via affiliate links. Basically, when you click an affiliate link shared by a creator, blogger, etc., when you make a purchase on the site, the person referring you gets a commission. In some cases, consumers may also get a special discount or deal by using a certain link or coupon code.
How does this relate to Honey? Well, according to the accusations, Honey’s browser extension would swoop in at the last minute and reassign affiliate attribution to itself. Notably, this would reportedly happen even if customers didn’t find a code using the tool. Because of this, fans who may have intended to support their favorite creators with their purchases were instead giving their affiliate business to Honey.
I’ll be honest: when watching Megalag’s video, I wasn’t too surprised to hear that Honey was overriding affiliate links. That’s because I know about last-click attribution and how the platform must make money. However, I would assume that this link replacement would only occur if you opted into earning Honey Gold/PayPal Rewards — or, at most, if it found you a coupon code. While I’d completely understand if the former is the case (that is how the whole system works, after all), taking attribution for providing coupon codes feels like a nebulous grey area to me. So, the fact that it appears Honey is even taking credit when a coupon is not found is obviously wrong IMHO.
With that said, it was actually the second part of Megalag’s video that really got my attention.
The consumer side issues
While the above situation also impacts everyday consumers who may be mad that their favorite creators didn’t get the money they intended to give them, there may be even more reason to be upset. Although Honey was said to deliver the best deals and codes to users, there’s a reason why that was not always the case.
It turns out that Honey offers a program where it partners with e-commerce businesses. In these instances, partner brands can decide which coupon codes populate in Honey — and, more importantly, which don’t. Sidenote: if this sounds like some sort of mafia protection scheme, I’d personally be inclined to agree (just my opinion).
The result of this partnership scheme is that, despite the marketing on Honey’s end, consumers are not guaranteed to get the best deals using the extension and, in reality, may even be intentionally dissuaded from finding them. Wild.
What’s happening now
Since the publication of Megalag’s video, in addition to creator responses, a class action lawsuit has now been filed against PayPal Honey. This development came from YouTuber and lawyer Devin Stone AKA Legal Eagle, as announced in his own video. Interestingly, while Stone briefly mentions the consumer aspect, his lawsuit is only in regards to the accused affiliate attribution claims. In fact, as Tom Kherkher explains, it seems that a consumer class action suit against Honey is currently unlikely due to the terms of service users agree to when signing up for the tool.
Final Thoughts on the Honey “Scam” Debacle
Even if it didn’t seem like it to me when I first started watching the video that set off this firestorm, the accusations about Honey are indeed a big deal. So is the tool a “scam?” While that word is thrown around a lot these days (especially on YouTube), I’d say this comes close — perhaps “scammy” is more appropriate?
Of course, the reason Honey was the target here was because they were a well-known YouTube creator sponsor — so making a video exposing them was sure to get a lot of attention on the platform. Thus, I’m now wondering how many rival platforms take similar actions.
On that note, though, I do fear that the nuance in the situation may be lost when looking at other services. For example, if a customer activates Rakuten cashback, it will absolutely override any other affiliate link they intended to use because that’s kind of the whole point (Rakuten is only able to provide cashback to customers because they are gaining affiliate income from the sale). Thus, it sadly wouldn’t surprise me if some enterprising YouTuber made an “expose” on this as if it were the same thing as what Honey is accused of.
Overall, with lawsuits now filed and public pressure building, it will be interesting to see how Honey and PayPal respond. Additionally, with a new administration incoming, will this be an issue that the FTC might take interest in? Alas, we’ll just have to wait and see.
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