Legaleagle Sues PayPal: 'Sleeping Leech' Honey Extension Dispute

Honey Browser Extension Accused of Revenue Diversion in New Lawsuit

A recently filed legal action alleges that Honey, a browser extension owned by PayPal, is improperly diverting earnings from content creators.

Acquired by PayPal in 2019 for $4 billion, Honey functions by automatically displaying applicable coupon codes to users during online shopping.

Allegations of Affiliate Link Substitution

However, YouTuber MegaLag publicly characterized Honey as a “scam” that actively “steals money from influencers” in a video released last month.

The core accusation centers around Honey’s alleged practice of substituting its own affiliate link for those promoted by creators. This occurs even when Honey doesn't contribute to any discount applied during the purchase.

Consequently, affiliate revenue is directed to Honey instead of the original content creator.

Legal Challenge Filed by LegalEagle

Devin Stone, a lawyer based in Washington, D.C., and known for his LegalEagle YouTube channel, has initiated a lawsuit against PayPal.

The suit claims that PayPal “systematically diverts commissions from rightful earners,” thereby disrupting the established affiliate marketing system.

Stone’s complaint highlights the irony of PayPal actively recruiting creators to promote Honey, while simultaneously undermining their income streams through commission diversion.

PayPal's Response

TechCrunch contacted PayPal for a statement regarding the allegations.

The company responded with a statement to The Verge, firmly disputing the claims and asserting its intention to mount a “vigorous” defense.

PayPal maintains that Honey adheres to standard industry practices, specifically citing “last-click attribution” as its guiding principle.

"Sleeping Leech" Analogy and Class Action Pursuit

Stone further elaborated on the issue in a video accompanying the lawsuit.

He described Honey as a “sleeping leech” within users’ browsers, passively awaiting transactions to redirect affiliate commissions.

This, he argues, diminishes the value of future sponsorships and affiliate partnerships for affected creators.

Seeking Collective Action

Stone is currently seeking class action status for the lawsuit.

He is actively looking to include other creators who believe they have been similarly impacted by Honey’s alleged practices.

The lawsuit aims to address the systematic diversion of commissions and protect the integrity of the affiliate marketing ecosystem.