Honey's business model is "an adpocalypse all day every day" for creators. LegalEagle just filed a class action suit to get them paid. - Tubefilter
Its been just over a week since YouTuber MegaLag uploaded his bombshell Honey expos accusing the coupon-finding browser extension of snatching content creators commissions by replacing their affiliate links with its own at the very last second before checkout.Now, creator lawyer LegalEagle is helping spearhead a class action lawsuit against Honeys owner PayPal, with YouTubers Sam Denby (aka Wendover Productions) and Ali Spagnola as the principal plaintiffs. PayPal acquired Honey for $4 billion in 2020, when the extension was earning around $100 million a year in revenue.LegalEagle (aka Devin Stone) tells Tubefilter that if MegaLags allegations against Honey are accurate, there is basically an adpocalypse going on all day every day and creators had absolutely no idea.Subscribe to get the latest creator newsSubscribeAnd that underground adpocalypse affects all creatorsnot only those who rely on affiliate commissions. Obviously the creators who may have had their affiliate links obliterated during the checkout process are among the most financially impacted. They lost money from sales they generated and traffic registration from their fans buying products they recommended. They did the work and didnt get paid. Maybe some lost sponsorships, if their ad spots didnt appear to convert to sales as well as expected.But even creators who dont do affiliate marketing or sponsorships can still suffer from this alleged business practice, Stone argues.Its possible that every advertiser in the world might think their advertising on social media platforms is less effective, if Honey is indeed coming in at the last second and taking the attribution that wouldve gone to the creator, Stone says. Creators rely on advertising, whether directly or indirectly. In some ways its a miracle that we are allowed to post our videos on YouTube for free, or our pictures on Instagram, or distribute our podcasts, and all of that is free. Thats because these platforms rely on advertising.Even if youre not using affiliate links, its our contention that if youre relying on the platforms hosting your content for free, if youre relying on advertising revenue, all of that is built on the presumption that advertisers know how effective their advertising is, he adds. Thats why attribution is so important.The lawsuit, filed Dec. 29 in the United States District Court for the Northern District of CaliforniaSan Jose, seeks two things:First, monetary damages for potential revenue that should have gone to creators but otherwise was intercepted by Honey.And, second, an injunction that will prevent Honey from engaging in these alleged business practices in the future.Both damages and injunction are equally important, Stone says, and hes working with a team of half a dozen other attorneys across Washington D.C., California, and the Midwest in hopes of obtaining them.He hopes that if a judge rules in plaintiffs favor, other companies could be investigated for allegedly utilizing a similar affiliation-snatching business model. He tells Tubefilter that based on research for the Honey case, he thinks other potential offending companies could include Karma, Capital One Shopping, and Pie, which was created this year by Honey co-founder Ryan Hudson.I was just furious after watching MegaLags video, and Im lucky to be in a position where I can actually do something about it, Stone says.He adds that candidate situations for class action lawsuits are rare, and says that regular consumers who installed the Honey extension to find deals while e-shopping will have a tough time pursuing class action litigation, because Honey has a class action waiver and forced arbitration (a measure that prevents customers with complaints from being able to take those complaints to court) baked into its TOS.But I actually think this is the perfect opportunity for a class action, because there are so many creators and influencers who have been potentially harmed by these actions, Stone says.Two of those creators are the suits plaintiffs. Both edutainment creator Denby and musician/comedian Spagnola have been potentially affected by alleged affiliation link sniping and the underground adpocalypse. (Its worth noting neither creator has worked with Honey in an official capacity; were not sure yet if creators who did have sponsorship agreements with Honey also had class action waivers and/or forced arbitration baked into their contracts, and thus might be ineligible for reparations from this suit.)Sam Denby is one of the most savvy creators on the planet, Stone says. He understands the creator economy better than anyone that I know, and I cant think of a creator who is better positioned to represent the world of creators than he is. As for Spagnola, she is also an incredibly savvy creator, and someone who relies on affiliate income to make ends meet, he says.Its important to have class representatives who are not only literally representatives of the class, but also someone who is unassailably doing things for the right reason, and doing things well, he says. Sam and Ali represent that.Ultimately, Stone believes Honey may have stolen billions of dollars from creators in the five years since it was acquired by PayPal.We look forward to conducting discovery to find out the exact numbers, he says.He encourages creators who think or know that Honey has prevented them from making money via affiliate links or attribution to reach out to honeycase@eagleteam.law.
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