[EXPOSED] What You Need to Know About The Honey Scam

Summary

Perpetual Traffic Episode Summary: [EXPOSED] What You Need to Know About The Honey Scam

Release Date: January 14, 2025

In this gripping episode of Perpetual Traffic, hosts Ralph Burns and Lauren Petrullo delve into a significant scandal shaking the digital marketing and affiliate marketing landscape: the Honey Scam. This in-depth discussion uncovers how Honey, a widely-used browser extension owned by PayPal, has allegedly manipulated last-click attribution to siphon off affiliate commissions from content creators and marketers.

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1. Introduction to the Honey Scam

Ralph and Lauren kick off the episode by highlighting the unexpected nature of the scandal within the digital marketing sphere. Ralph shares his personal frustration as a former affiliate who lost substantial commissions, setting the stage for a critical examination of Honey's practices.

Notable Quote:

Ralph Burns [04:14]: "As a former affiliate who got screwed out of hundreds of thousands of dollars in commission, this one really pisses me off here today."

2. Understanding Honey and Its Functions

Lauren provides a comprehensive overview of Honey, explaining its role as a free browser extension designed to find and apply the best coupon codes for online shoppers. With over 17 million active users, Honey positions itself as an invaluable tool for consumers seeking discounts effortlessly.

Notable Quote:

Lauren Petrullo [05:08]: "You have a coupon clipping AI assistant in your right hand upper browser."

3. The Mechanism of the Scam

The core of the scandal revolves around Honey's manipulation of last-click attribution. Instead of driving genuine traffic and sales to merchants, Honey injects its affiliate code at the checkout phase, ensuring they receive a commission regardless of the actual promotional effort by content creators.

Detailed Breakdown:

• Last-Click Attribution Theft: Honey overwrites the original affiliate's tracking, claiming commissions for sales initiated by creators.
• Impact on Creators: This deceit means that creators who diligently promote brands see a significant drop in their attributable revenue.
• Scale of the Deception: With Honey being integrated into countless shopping experiences, the scope of the scam affects a vast number of influencers, from nano to mega levels.

Notable Quote:

Ralph Burns [06:25]: "Honey was just there at the last second slipping in last click attribution to which they stole, in theory, millions and millions and millions of Dollars from the creators."

4. Consequences for Content Creators and Marketers

The repercussions of Honey’s actions are far-reaching:

• Financial Losses: Creators lose out on commissions they rightfully earned, affecting their income and sustainability.
• Contractual Issues: Brands and creators face challenges in contract renewals and negotiations due to discrepancies in attributed revenue.
• Reputation Damage: Smaller creators, in particular, suffer as their trust with audiences erodes when their promotional efforts don’t yield expected results.

Notable Quote:

Lauren Petrullo [10:52]: "It's the biggest influencer scam of all time. It affects way more individuals than any other affiliate or influencer type of scam that's happened before."

5. Legal and Industry Implications

The scandal has ignited legal battles, including a class-action lawsuit filed by Sam, a legal expert, targeting Honey in California. This lawsuit could set a precedent for how browser extensions and affiliate programs are regulated, potentially leading to stricter oversight and accountability within the industry.

Notable Quote:

Ralph Burns [15:28]: "People are saying that this is the biggest influencer scam of all time. Would you agree with that?"

6. Host Predictions and Future Outlook

Ralph and Lauren discuss the broader implications for the influencer marketing ecosystem:

• Shift Towards Micro and Nano Influencers: As trust in large influencers wanes, brands may pivot to collaborating with smaller, niche influencers who maintain closer relationships with their audiences.
• Increased Due Diligence: Both creators and brands will need to scrutinize partnerships more carefully, ensuring transparency and legitimacy in their collaborations.
• Regulatory Changes: Expect potential legislation targeting browser extensions and affiliate tracking practices to prevent similar scams in the future.

Notable Quote:

Lauren Petrullo [18:26]: "When something is free, if it's too good to be true, it probably is. That's what I think is the biggest takeaway."

7. Key Takeaways and Lessons

The episode underscores several crucial lessons for listeners:

• Vigilance in Partnerships: Creators and brands must thoroughly vet any tools or platforms they use, especially those offering free services with significant benefits.
• Reading Terms of Service: Understanding the fine print is essential to avoid unknowingly compromising revenue streams or legal positions.
• Protecting Reputation: Maintaining trust with audiences is paramount, and aligning with dubious platforms can have long-term detrimental effects.

Notable Quote:

Ralph Burns [23:02]: "Read the terms of service. Especially if you're just starting out doing this, this should be a lesson for you that this is not the way to do it."

8. Conclusion and Final Thoughts

Ralph and Lauren wrap up the discussion by emphasizing the importance of due diligence and the potential for significant industry shifts in response to the Honey Scam. They encourage listeners to stay informed, protect their interests, and approach new tools and partnerships with a critical eye.

Notable Quote:

Lauren Petrullo [22:09]: "You cannot. That's still not following like your own responsible and duties for it."

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Final Note: For listeners eager to delve deeper into the Honey Scam and its ramifications, Ralph and Lauren promise to include relevant links and resources in the show notes. They also invite audience engagement through comments and ratings, ensuring the community remains informed and vigilant against such deceptive practices in the future.

Transcript

[Ralph Burns]

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[Lauren Ipatullo]

You'Re listening to Perpetual Traffic.

[Ralph Burns]

Hello and welcome to the Perpetual Traffic podcast. This is your host, Ralph Burns. I'm the founder and CEO of Tier.

[Lauren Ipatullo]

11 alongside Lauren Ipatullo, founder of Mongoose.

[Ralph Burns]

Media, my amazing co host. We're a little bit punchy here late in the day because we are bringing you breaking news. Well, it's not quite breaking, but it is our take on a pretty big scandal that happened in our space. Can you imagine scandal and scamming happening in the digital marketing or affiliate marketing space? Lauren? Like, what are the chances?

[Lauren Ipatullo]

No, never.

[Ralph Burns]

As a former affiliate who got screwed out of hundreds of thousands of dollars in commission, this one really pisses me off here today. So, Lauren, can you explain exactly what happened with this little thing called Honey?

[Lauren Ipatullo]

Yeah. So Honey, which is a company owned by PayPal, got listed in a Mega Lag video on YouTube recently about the way that they have been taking last track attribution from all of the creators, including many of which they have been paying to sponsor their content with. Like, it's. They're stealing from the people they are paying to steal from.

[Ralph Burns]

Paying the. Stealing from the people they're paying to steal from. So I follow that. Okay, so explain that.

[Lauren Ipatullo]

It's a lot. It's like take it in. Honey is an extension that you add to your browser. Yep.

[Ralph Burns]

See, you can tell it's like the right hand corner of your browser. The little jigsaw puzzle. It's one of those.

[Lauren Ipatullo]

It's one of those. It's free. And what prompted millions, I think it was like 17 million active users on the browser extension was the promise of if you use Honey, you will get the best coupon code available. To you as a consumer. Sounds amazing. I'm going to go shopping. I know I have a 10% discount because I signed up for the welcome, but if I use the Honey Chrome extension, I'll be able to maybe find a 25 or 35 or 40% discount. Count me in.

[Ralph Burns]

So it searches the Internet finds. This is always something. It's like, do you have a coupon discount code? And then you go searching. This does it automatically for you.

[Lauren Ipatullo]

Yeah. Saves you time in theory. You don't have to search the Internet for the best code out there. You have a coupon clipping AI assistant in your right hand upper browser.

[Ralph Burns]

Perfect. Sounds great so far.

[Lauren Ipatullo]

You would see how easy it was to install, how easy it was to get instant gratification if there was a code. And then the other part is if there wasn't a code, you'd get this promise that we've scoured the Internet. There is no better savings to apply for. You feel confident in the purchase price you're continuing on with.

[Ralph Burns]

Thank you, Mr. Mrs. Honey, for the savings. Something is amiss here.

[Lauren Ipatullo]

Yeah. Mark Flyer had said when you're not paying for something, you are the product. Like, he had used really good language in like 2021 when he was like, trying to figure out, like, how is Honey making any money? If they're not making money, you're the reason they're making money. So how they made money is one, you use their Chrome extension. Whether or not you found a coupon code, Honey went in and wrote, inserted their affiliate code script because it's at checkout. They inserted their affiliate code coupon script to automatically claim at minimum 3 to 5% commission on every single purchase done by their browser extension. And that was like, in language that they had. If you're working with Honey, the store has to give you that.

[Ralph Burns]

So make sure everybody reads commission service, of course, like all of us do. Sure.

[Lauren Ipatullo]

Oh, my. Yeah. If you haven't seen the film Jackson, it's a really good one where it talks about how, like, it's a parody on Siri and how he doesn't read the terms of service and it just makes fun of him the entire time. Roseburn voices it. 10 out of 10 recommend. But this app was taking last click attribution at the checkup. They didn't drive traffic to the store. They didn't influence you being interested in that product. They were just there at the last second slipping in last click attribution, last click attribution to which they stole, in theory, millions and millions and millions of Dollars from the creators who sent original affiliate traffic to that store. And where this becomes diabolical is when you think about creators who have partnerships with brands and they are renewing their contracts based off of attributable revenue. You can think of the thousands of creators deals that were not renewed because assumed lack of attribution despite a video they launch on YouTube, which is where this whole scandal came prevalent and why so many YouTubers who create these videos to promote affiliate sales is a large revenue stream. So many of these videos that were very successful videos in terms of views and comments were not successful for the brand in terms of attributable revenue. Well, if they were using the Honey Chrome extension, any possible sales were deleted, possible deals were not renewed, but most importantly, the obvious affiliate commission was stolen.

[Ralph Burns]

Right, right out from under them. And you're saying in the terms of service, which we'll have to hunt this down and leave it in the show notes somewhere somehow the lesson in this is read the terms of service because I'm sure it's really long.

[Lauren Ipatullo]

Is that the lesson? I mean, every lawyer listening will say, yes, never sign a deal.

[Ralph Burns]

Well, there's plenty of people that listen to this show that do affiliate marketing, myself included. The, the point is, is that this is totally sneaky. And Honey is owned by PayPal.

[Lauren Ipatullo]

Yes, a huge company. Like that's how they got on the last click extension. I mean, you think about it, you also have the opportunity to pay with PayPal. And so in Megalog's video and then follow up YouTube videos that I watch, you would see how like then Honey would offer the option to pay with PayPal. And even if there was the pay with PayPal button, they had this like another way to see. It was just like, how are all the different ways I can sneak in, slip in my phone number? So I think of like all the times that I've gone to a bar and I would find I don't know how this number got into my purse or my pocket. No, thank you. But a for effort because I was impressed that it somehow got there and I didn't realize I had been groped.

[Ralph Burns]

That happens to you, huh? Wow.

[Lauren Ipatullo]

It used to. Yeah, it used to. It hasn't happened in a while. So I'm going to go back to the days when people cared.

[Ralph Burns]

Yeah, well, it would if people left notes Now. Now it's like now why you just.

[Lauren Ipatullo]

Go on an online app? Why would you waste time writing a note?

[Ralph Burns]

Why would you waste time writing. It's so old school. It's so like 1990s. So this extension has been downloaded over 17 million times. This is not small extension. This is like a massive thing. And some of the affiliates are some of the biggest names that we know.

[Lauren Ipatullo]

Mr.

[Ralph Burns]

Beast, Uber World.

[Lauren Ipatullo]

Yeah, he's done multiple videos, 100%.

[Ralph Burns]

So he got scammed out of it too.

[Lauren Ipatullo]

Yeah, but, so there was in Megalov's video, he said he found over a thousand videos on YouTube where creators were promoting Honey. Likely it is that Honey paid them to make that sponsored content. So what's interesting for me, and I'm like watching all these responsive, reactive videos, I'm like, you guys are talking about a brand you signed a contract with because you're upset that you didn't read the original contract of the brand that you were working with. And I was like, oh, there's going to be a live suit for sure coming. Because there are some brands that are like screaming at Honey. And I'm like, you should check what agreement you have, because likely you're in violation. So I was like, you're gonna complain about Honey and Honey's gonna come after you. I'm not encouraging that, but I'm just like, if you are listening and you worked with Honey and they paid you specific, any brand that you work with, you need to be mindful that maybe if you had done your due diligence in the beginning, you'll either say if you want to work with a brand or not, but you have to be careful because you could be held liable for years after the completion of your contract. So anyways, there's a lot going on. They paid people to do sponsored videos, but then there's all the smaller creators that maybe didn't get paid by Honey. And it didn't matter because the Mr. Beasts of the world were getting people to add the Honeycomb extension. And then you have a. A podcast or you have a small channel that's like a Nano or Micro influencer. Someone who's just gaining traction. You're taking money from them and they didn't even know what Honey is. That's diabolical.

[Ralph Burns]

Yeah, that's crazy. So my assumption is that it was not just for PayPal purchases.

[Lauren Ipatullo]

Correct? Any purchases, doing a card, Amex, Visa.

[Ralph Burns]

Right. But it was everything, every purchase.

[Lauren Ipatullo]

And Ralph, it wasn't just the purchases where they found. So if you're like, okay, cool. Hey, Honey found me a 40% discount. You know what, Honey? Thank you. You can get a small piece of that maybe if you're justifying it. But it took credit for the purchases where they didn't even provide a discount just because you checked. You have to pay for looking in the mirror. You didn't fix your makeup, but you still caught a glance. Pay up. Every person who's ever walked by a window starting to count how many times they checked themselves out while walking down the street across a bunch of retail store windows. Imagine having to pay every single time you snuck a glance.

[Ralph Burns]

I don't do that. But anyway, if he did be very expensive for somebody who did do that.

[Lauren Ipatullo]

All right, party of one. You're just not going to admit it, Ralph.

[Ralph Burns]

I'm just not admitting it. Of course. So Mr. Beast is pretty pissed off, I would imagine.

[Lauren Ipatullo]

So I haven't found any of his reactions. I like, I've been looking because Jimmy has done many videos and my fear is that there are going to be some creators that are going to go after him potentially because they trusted the brand. Honey, assuming that his team would have done the due diligence. Now that's not his fault. If any creator was like, well, if Mr. Beast is doing it, it must be a good company to work with. You cannot. That's still not following like your own responsible and duties for it. But I imagine there are going to be big creators that are going to get a lot of hit because they're smaller creators. Their fans follow them. It's like, you know when someone like bet on crypto and I believed you and now I hate you for life because I lost my money following your crypto advice. If you haven't watched Squid Game, that was like one of the characters points of contention. But that's, oh, I think this is going to unravel a lot, lot more. There's a class action lawsuit that Sam, the legal eagle has already filed, which I'm like, hey, good for him because he's catching the wave of a very trending topic. Really great guy. Met him at VidSummit, one of the best conferences I can recommend for sure, if you're looking at YouTube stuff. And so a lot of the creators at VidSummit, like I imagine honey is either gonna have to like go out of business or sponsor everything at the next YouTube or VidCon or VidSummit type. Every YouTube creator was affected.

[Ralph Burns]

Yeah, well, I mean, at least they're backed by a company that has some money to be able to go after in a class action lawsuit. So there is that. There might be some reparation damages here.

[Lauren Ipatullo]

At the end of maybe, but imagine what precedent that will set forth because PayPal team with Honey said that they haven't done anything illegal.

[Ralph Burns]

Well, of course, that's the patented response though.

[Lauren Ipatullo]

Sure.

[Ralph Burns]

Start off with, I mean you're not going to admit guilt for something like this. It has to be proven in court. And they filed a lawsuit in California, so they're probably going to get screwed. So people are saying that this is the biggest influencer scam of all time. Would you agree with that?

[Lauren Ipatullo]

I think it affects way more like the argument of the ones before it I would think are like supplement scams or like Fyre Festival type of levels where people invested. I would even put like crypto scam.

[Ralph Burns]

Cleanse from the late 2000s. I wouldn't know anything about that. But that the FTC got involved in that. The FTC might actually get involved in something like this.

[Lauren Ipatullo]

Oh, that will be interesting.

[Ralph Burns]

That would be interesting.

[Lauren Ipatullo]

They should. I mean, for me, I could argue that. I think this supersedes crypto and whatever that acai. Whatever those are in the sense that for a company that generated money from last click attribution, I think all of the previous click attributes are what makes it so big with crypto. You knew you bought the crypto, you didn't buy the crypto with Fyre Festival, you bought the tickets or you didn't buy the tickets with this, you could not, you might not have even heard of Honey and you could have been affected. So I think this affects more individuals than any other affiliate or influencer type of scam that's happened before. And I think the consequences are even bigger because of the secondary tertiary like the contracts that weren't renewed, the money that wasn't paid out, the impact to channels, all that kind of stuff.

[Ralph Burns]

Yeah, it's incredible. We'll leave links in the show notes to this. But I did actually do a search for the FTC case and the Sia Colon cleanse issue, which was you were probably still in junior high school when this happened. But anyway, it was a big deal and 11 affiliates, super affiliates basically lost everything and were arrested. It was a big deal. Yeah. And they were getting well. Just to go into my sordid past, the, the thing to watch out for as you were waiting, whether or not you were going to be one of those people, because I was a super affiliate for this particular thing. It was a blue letter from the FTC which never actually came, thank God, because I had already gotten investigated by the fda. That's a whole other thing. Maybe we should do that one after like a bottle of scotch at some point in time in 2025. The point is, is like this is bordering on FTC territory because I mean, that was tens of millions. It wasn't even real. Well, it's probably hundreds of millions of dollars in damages. So we'll look that one up and we'll leave links in the show notes there. But this is something to be careful of, like affiliates. I mean, it is your responsibility to read terms of service. It is very hard to do though. And this is the risk. I mean, this is the risk at a large level. I think the folks that are primarily listening to the show are not maybe at the Mr. Beast level, you might be listening to your own podcast at that point. The point is it's like if you are, you need to divulge, first off that you do have affiliate links. Secondly, you need to really do watch out for these, investigate it as much as you possibly can or avoid it altogether. Or what's your takeaway from this whole thing? I guess that's a better question.

[Lauren Ipatullo]

I think my takeaway. So for me, the heartbreaking piece is those that didn't work with Honey got screwed. So it's even if they didn't, the people that partnered with the brands. If you are a creator, you're an influencer and you work with brands. Similarly, if you're a brand and you work with creators and influencers, like you want to have easy to understand agreements. If you're a brand, you better put in your language that any creator that you pay money to make content for should not be able to do what a lot of these creators are doing about Honey. I'm saying, like, protect yourself. Because I'm like, oh yeah, if you're paying someone, own or control the conversation. If you're getting paid by someone, be aware of what the company is and you do the due diligence. Like they're like, hey, this works. It seems like it's a great product. I wouldn't expect you to know how to look at the inspec to see that the cookie is being overwritten. But there's just a word of caution. When something is free, if it's too good to be true, it probably is. And that's what I think is the biggest takeaway. But in 2025, influencer marketing, affiliate marketing, I think is coming for a bigger reckoning where you had already given your predictions like a couple weeks ago about nano and micro influencers having a big impact. I think brands listening to this are going to have to know that you have to proceed with sensitive individuals now because they've just gotten so Badly burned where maybe. Ralph, I'm going to say more alignment with your prediction because micro and nano influencers are going to be pickier with the brands they work with and there's an opportunity there.

[Ralph Burns]

Yeah, well, I mean if you're a macro influencer or a mid tier or somebody that's higher up, you have to be suspect anyway. I mean the Kim Kardashians of the world and the rocks of the world, like those are like huge, huge names that very few companies, unless you're a mega brand or you're an enterprise level company are going to interact with those types of folks. But the point is, is nano influencers, micro influencers, your reputation is on the line here. So you have to be very, very careful with this sort of stuff. And you do have to read just don't take money to take money because you could damage your reputation as a long term business model as well. But my prediction from a few shows ago was because those people typically don't get hundreds of offers and are just shilling anything and everything, it's an opportunity for brands to go after a very specific niche. Like I have a friend who's in the nanocercumin niche and another one who's in specifically a certain type of algae supplement. There are micro and nano influencers. Those are tiny niches, not microcurcumin per se, but like in the algae influencer network it's all nano and micro. It's like, how can I get some kind of traction with my business as I'm starting up? I'm like, go reach out to these people. Because yeah, not only just be onesie twosie sales, you can have a personal relationship with them. And that's the beauty of nano and micro influencers. Whereas as soon as you get bigger, they're getting a lot more action. And are they really backers of the product? And secondarily, if you are in that market, you need to look at these types of arrangements very, very closely because your reputation can be on the line and then all that trust and goodwill that you've built up with your audience can be taken away like that.

[Lauren Ipatullo]

So what's between the macro and micro?

[Ralph Burns]

Mid tier is 50 to 100,000.

[Lauren Ipatullo]

Okay.

[Ralph Burns]

Followers in that range and macro is 50 to 500,000 or half a million and then it's 500,000 to a million is macro. But basically anywhere like.

[Lauren Ipatullo]

And then your megas.

[Ralph Burns]

Yeah, and then there's like the mega ones which are way above that.

[Lauren Ipatullo]

I'm just saying like the super mega influencers and a Lot of those macro influencers that promote a company like Honey came after a lot of smaller brands, smaller influencers. And I think you need to be aware of what you're peddling. But there's also you have to be aware of the power of the publish because as soon as you hit publish again, your brand reputation, I think there are going to be a lot of influencers that creators are going to say I trusted you because and it's going to damage and their micro and nano influences are going to then be reflective. It's like you lost. It's like the election, right? You lost Florida, you lost Ohio.

[Ralph Burns]

Yeah.

[Lauren Ipatullo]

And there are going to be some swing state level influencers that I think is going to have ramifications. So it's, I mean, word of caution, word of caution. Read the terms and services.

[Ralph Burns]

Read the terms of service. Especially if you're just starting out doing this, this should be a lesson for you that this is not the way to do it. But I mean, like you said before, if it's too good to be true, it usually is. If you think about it, it's like, man oh man, I wish I had something that could automatically figure out like what that coupon code is to get me a 10 or 40% off or whatever it happens to be. I mean it's a great idea, but if it sounds a little bit too good to be true, sometimes it is.

[Lauren Ipatullo]

So I'm curious as to what's going to happen with the Rakutens and the other Chrome extensions that offer value in advance. I've met some people that $10,000 a day with their Chrome extensions because they have like a 199 per month model. But I'm looking at the 27 Chrome extensions I have attached. Most of them are connected to paid apps that I have. So it's just an extension of a software that I'm using. But I think there's going to be a legislation that's going to come in for this part of the Internet that's been totally ignored. No one talks about Chrome extensions. Apps are barely reviewed.

[Ralph Burns]

Yeah. All right, well, we'll leave all the links in the show notes here for all this stuff for you to at least investigate. And some of the links to some of the stories that we did reference in today's show, of course, wherever you listen to your podcasts, comment over on Spotify now. Very cool. And leave a rating for us. We will read that out on the air as we haven't done in the last couple of weeks. And we're way overdue Lauren. That's your job. By the way. I'm just blaming you for not reading any of those so.

[Lauren Ipatullo]

Understood. Noted. Moving forward, I will come forward with all of the so if you're nicer about me in the comments, be ready. Yours is more likely to be read.

[Ralph Burns]

If you say nice things about Lauren in the comments, then we'll read it out loud. Anyway, thank you so much for listening to today's show. All of our links are over@perpetual traffic.com of course you can watch this over at Perpetual Traffic channel on behalf of my awesome co host Lauren E. Petrulo. MBA girl with blonde hair emoji on her laptop. On her laptop working away currently red.

[Lauren Ipatullo]

Is the earring she's wearing.

[Ralph Burns]

That's true. It's our best outro ever. All right, ciao. I'm gonna say it for you because you're laughing too hard. Till next show. See ya.

[Lauren Ipatullo]

You've been listening to Perpetual Traffic.