I have worked in the affiliate marketing industry for over 10 years, and I have never encountered a scandal of this magnitude or such a deceptive way of making money through affiliate marketing. This story was initially uncovered by the YouTuber MegaLag and has since gained traction as other investigative YouTubers have started delving into it. Most recently, Penguinz0 (also known as MoistCr1TiKaL) stepped forward to apologize for his partnership with Honey, stating he was completely unaware—like everyone else—of their “business model,” which I personally would describe as a scam.

Here’s my take on this emerging scandal and an explanation of how I believe PayPal Honey (formerly Honey or JoinHoney) has deceived millions of people and businesses.

A quick introduction to affiliate links for understanding

To explain how PayPal Honey has, in my opinion, deceived, cheated, and scammed, it’s essential to understand how affiliate marketing works. Here’s a brief overview of the process to provide the necessary context:

How Affiliate Marketing Works

Affiliate marketing is a performance-based marketing strategy where businesses reward affiliates (such as influencers, websites, or platforms) for driving sales or traffic to their site through affiliate links. When a user clicks an affiliate link and completes a purchase, the affiliate receives a commission.

The system typically operates on a “last-click” basis, meaning the affiliate whose link was clicked last before the purchase is credited with the sale. This mechanism ensures that the affiliate marketer directly responsible for the conversion is rewarded.

However, this model relies heavily on transparency and fair practices to ensure all parties—affiliates, businesses, and consumers—benefit from the system.

What PayPal Honey has been doing wrong

It’s not just consumers that PayPal Honey has misled—in my opinion, they’ve also deceived all their partners while employing highly questionable affiliate marketing tactics. These methods are so unethical that my perception of PayPal has been permanently damaged. They have quite literally taken advantage of hardworking affiliates like myself, leveraging their popularity without offering anything of real value in return. Here are the three ways PayPal Honey has cheated, scammed, and exploited their widespread popularity.

Scamming Partners: How PayPal Honey Takes Affiliate Commissions from Their Own Partners

Affiliate marketing operates on a “last-click” basis, meaning the last affiliate link clicked before a purchase determines who receives the commission. For PayPal Honey affiliates, this typically means influencers and affiliate partners are rewarded for driving sales. However, as exposed in MegaLag’s video, the process may not work as transparently as it seems.

According to MegaLag’s claims, PayPal Honey rewards influencers and affiliate partners only when it successfully applies an active coupon code during checkout. If no valid coupon is found, the Honey Chrome extension allegedly replaces the existing affiliate link with its own, even if the user clicks “OK” on a prompt suggesting otherwise. This allows Honey to claim 100% of the commission while the original affiliate is left with nothing.

Even when Honey applies a valid coupon and shares the commission, MegaLag highlights another major issue: the share given to affiliates is reportedly a small fraction of what Honey itself earns. In MegaLag’s investigation, he tested NordVPN’s affiliate program. By using Honey, he earned $0.89 in commission. By contrast, working directly with NordVPN’s affiliate program earned him $35 for the same purchase.

This means that PayPal Honey allegedly retains 99.9746% of the commission, rewarding affiliates with a mere 0.0254%. If true, such practices would not only undermine affiliates but also challenge the ethical foundations of the affiliate marketing industry.

Stealing from Affiliates: How PayPal Honey Exploits Its Popularity to Take Affiliate Commissions

PayPal Honey has been accused of exploiting its widespread popularity to hijack affiliate commissions in ways that many consider unethical. A key tactic involves their browser extension popup, which appears during the checkout process. Even when Honey cannot find any valid discount codes, the popup encourages users to click an “OK” button, subtly activating a hidden affiliate link. This ensures that Honey gets the “last click” attribution, overriding the original affiliate link and securing the commission for itself.

These tactics are particularly concerning because they rely on misleading behavior, leveraging Honey’s trusted reputation to manipulate users into unknowingly benefiting Honey at the expense of legitimate affiliates. This practice not only cheats affiliates out of their rightful earnings but also undermines the integrity of the affiliate marketing industry as a whole.

As someone deeply involved in affiliate marketing, I find these methods especially troubling. Instead of contributing value to the ecosystem, PayPal Honey is allegedly exploiting its position to siphon commissions through deceptive practices—a move that I find both unethical and deeply disappointing.

Scamming Consumers: How PayPal Honey Allegedly Misleads Customers

PayPal Honey has not only been accused of allegedly taking affiliate commissions from their partners but also of selectively displaying coupon codes to benefit themselves rather than consumers.

According to MegaLag’s claims, Honey does not always show the best available coupon codes to shoppers. Instead, the platform allegedly prioritizes codes that ensure Honey earns an affiliate commission, even if better discounts are available elsewhere. This practice undermines Honey’s core promise of helping customers save money by finding the best deals.

If true, this approach not only deceives consumers but also erodes trust in Honey’s platform. Rather than acting as a tool for savings, these claims suggest that Honey prioritizes profit over transparency, leaving shoppers unknowingly missing out on better deals.

What is Honey (PayPal Honey)

Honey, now known as PayPal Honey, is a popular browser extension and mobile application designed to help users save money by automatically finding and applying coupon codes at checkout. Over the years, it has become a prominent name in the world of online shopping and affiliate marketing.

How Honey Got Started

Honey was founded in 2012 by Ryan Hudson and George Ruan in Los Angeles, California. The idea originated from a desire to simplify the process of finding coupon codes while shopping online. At the time, searching for discounts was a tedious, manual task, and Honey aimed to streamline this by offering an automated solution.

By March 2014, Honey had grown significantly, with over 900,000 users actively utilizing the extension. This early success paved the way for its rapid expansion.

Honey’s Rapid Growth and Popularity

Honey gained traction quickly due to its user-friendly interface and ability to save money with minimal effort. It worked across thousands of e-commerce websites, making it a versatile tool for shoppers worldwide. By 2018, Honey claimed to have over 10 million active users and had saved customers more than $1 billion in discounts.

The company introduced additional features like price tracking with the “Droplist,” where users could monitor items for price drops, and Honey Gold, a rewards program that allowed users to earn points redeemable for gift cards or PayPal cash.

PayPal Acquires Honey

Recognizing its potential, PayPal acquired Honey in January 2020 for approximately $4 billion, marking one of PayPal’s largest acquisitions. The integration of Honey into PayPal’s ecosystem allowed the financial giant to enhance its value proposition for consumers by offering more savings opportunities directly within its platform.

Under PayPal’s ownership, Honey expanded its reach and continued developing features to attract even more users. However, the acquisition also brought increased scrutiny to its business practices, especially in the realm of affiliate marketing.

Honey’s Role in Online Shopping Today

Today, Honey boasts millions of users worldwide and remains a key player in the online shopping and affiliate marketing industry. It supports thousands of websites, offering automatic coupon applications, price tracking, and rewards through PayPal’s ecosystem. However, as the platform has grown, so too have questions and controversies regarding its methods, particularly in its use of affiliate marketing practices.

From its humble beginnings as a tool to simplify online shopping to becoming a multi-billion-dollar asset under PayPal, Honey’s journey is both a testament to its innovation and a cautionary tale for ethical business practices.

MegaLag’s YouTube video uncovering the scam

In December 2024, the YouTube channel MegaLag released a video accusing PayPal Honey of engaging in deceptive affiliate marketing practices. The allegations suggest that Honey intercepts and redirects affiliate commissions, diverting earnings from original content creators to itself. This is purportedly achieved by replacing existing affiliate tracking cookies with its own during the checkout process, often without the knowledge of consumers or influencers.

Additionally, MegaLag’s investigation claims that Honey may withhold more valuable coupons from shoppers, undermining the company’s marketing claims of providing the best deals.

These practices have raised concerns about the ethical implications of Honey’s operations, particularly regarding transparency with users and fair compensation for content creators. Following the video’s release, several prominent YouTube creators, some of whom had previously partnered with Honey, addressed the allegations and expressed regret for promoting the extension without being aware of its purported practices.

As of now, PayPal Honey has not publicly responded to these allegations. Users and content creators are advised to exercise caution and conduct thorough research when engaging with browser extensions and affiliate marketing programs.

For a more detailed understanding, you can watch MegaLag’s investigative video below: