Forty percent of Honey’s user base — gone. Seven thousand merchant partners — gone. What was once a 20-million-user Chrome extension now sits at roughly 12 million since December 2024, when YouTuber MegaLag published an investigation accusing Honey of something quietly predatory: overwriting creators’ affiliate IDs at checkout, so Honey collected the commission even when it provided no actual discount. Affiliate tracking is straightforward in theory — a creator’s unique link earns them a cut when their audience buys something. Honey allegedly hijacked that cut. Silently. At scale.
Networks Cut the Cord
Three major affiliate platforms responded to the allegations with sanctions that no press release could soften.
Stand-down rules exist for exactly this reason: when a creator’s link already earned the click, extensions are supposed to back off. Honey allegedly didn’t. The fallout across affiliate networks came fast:
- Rakuten Advertising terminated Honey on January 12, 2026, cutting access to roughly 2,000 retailers — Walmart, Sephora, Dyson, and Lego among them
- Impact.com suspended Honey mid-January 2026, citing attribution manipulation
- Awin Group suspended payments and blocked Honey from new advertiser programs entirely
- Honey’s coupon database shrank from roughly 90,000 to around 50,000 codes — and at least 10,000 of those are reportedly expired
- Rakuten conditionally reinstated Honey in May 2026 after it adopted Rakuten’s open-source TypeScript SDK for stand-down compliance
PayPal’s defense is that the problematic code affected less than 0.1% of traffic, predates its 2020 acquisition of Honey for around $4 billion, and has since been deactivated. MegaLag disputes both the timeline and the claimed scope. The most neutral evidence available — three independent affiliate networks sanctioning Honey based on their own internal policy reviews — suggests something more than a rounding error was happening. You know the “free product, you’re the product” dynamic that applies to every app that never sends you an invoice? Honey reportedly took it a step further, allegedly collecting revenue from the very creators driving its downloads.
The Lawsuit That Won’t Die
After an initial dismissal, a revised creator lawsuit has now survived PayPal’s motion to dismiss and entered discovery.
An earlier version of the creator lawsuit was dismissed in November 2025 — Judge Beth Labson Freeman ruled plaintiffs hadn’t demonstrated contractual entitlement to the diverted commissions. Creators refiled with detailed contract evidence showing exactly what they were owed. On June 22, 2026, Judge Freeman denied PayPal’s motion to dismiss the second amended complaint, allowing all claims — including potential Computer Fraud and Abuse Act violations — to proceed. MegaLag called it “a huge win for content creators and a massive blow to PayPal.”
To be clear: no liability has been established. But discovery has begun, meaning plaintiffs can now demand PayPal’s internal communications and technical documentation. What those documents reveal may matter well beyond one browser extension — and well beyond your checkout page.
