MegaLag declined to provide a statement when contacted by USA TODAY. Here’s a breakdown of the accusations made by MegaLag and how they compare to industry norms.
What is Honey? Honey is a free browser extension that claims to help users find coupon codes when checking out during online shopping. Established in 2012, Honey was acquired by PayPal in 2020 for around $4 billion. At the time of acquisition, Honey served approximately 17 million monthly active users and was estimated to save consumers about $1 billion annually.
Following the acquisition, PayPal introduced PayPal Rewards, an incentive program designed to encourage the use of the Honey extension. Users can earn points through the extension, which can be redeemed for cash back, PayPal shopping credit, or gift cards. In a recent video, MegaLag criticized this rewards program, calling it a “lame cashback scheme” and provided a comparison between earnings from affiliate links and PayPal Rewards cashback for the same purchase.
The video has sparked discussion in the creator community, with YouTube personality Mark Fischbach expressing his skepticism about Honey during a Twitch stream in 2020. Fischbach’s comments have resurfaced following the attention on MegaLag’s video.
One of the key points of contention raised by MegaLag is Honey’s alleged breach of affiliate links. In essence, by using the Honey extension and making a purchase through it, Honey earns a commission instead of the creator whose affiliate link was originally followed by the consumer. This practice is known as last-click attribution, where credit is given to the last touchpoint before a purchase is made.
Although there are various types of attribution methods in affiliate marketing, last-click attribution is widely considered the industry standard. In a video, MegaLag criticizes Honey for its use of last-click attribution, accusing the company of exploiting the system. MegaLag argues that while last-click attribution may be fair in content creator versus content creator scenarios, it becomes unfair when pitted against a massive entity like Honey, which strategically positions itself to capture the final click in a customer’s purchasing journey, even without offering any coupon codes.
Another common practice in affiliate marketing is the stand-down policy, which is enforced by host sites, such as retailers, to ensure that browser extensions like Honey do not receive credit for conversions if the retailer has implemented such a policy. In response to MegaLag’s claims, YouTube creator Hank Green released a video titled “The Honey Scam and the Ridiculous Mess of Affiliate Marketing,” shedding light on the challenges faced by small business creators who often rely on affiliate marketing for revenue generation.
Green questions the level of responsibility that creators should have in understanding the business models of companies they engage with for brand deals, highlighting the complexities and potentially exploitative nature of the affiliate marketing ecosystem. Both MegaLag and Green assert that companies like Honey and PayPal may be taking advantage of content creators in this space.
Experts have been consulted by USA TODAY to provide additional insights on industry best practices, including the sourcing of coupons by Honey and allegations of limited coupon code offerings. MegaLag also accused Honey of misleading advertising practices, specifically regarding claims of searching for all available coupons on the internet with a single click. In response to scrutiny, Honey informed the National Advertising Division that it was phasing out the misleading advertisement.
For “business reasons,” as per a Better Business Bureau news release, Honey has agreed to permanently cease the related advertisements. Consequently, the National Advertising Division inquiry has been concluded.
