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PayPal Honey

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PayPal Honey
Company typeSubsidiary
IndustryCashback website, online coupons
FoundedOctober 2012 (2012-10)
FoundersGeorge Ruan[1]
Ryan Hudson[1]
Brian Silverstein[2]
HeadquartersLos Angeles, California, United States[3]
Area served
Canada, United States
Key people
George Ruan
(CEO)
Ryan Hudson
(Co-founder)
Number of employees
209 (worldwide, 2018)
ParentPayPal[1]
Websitejoinhoney.com

PayPal Honey, formerly known as Honey, is an American technology company and a subsidiary of PayPal known for developing a browser extension that aggregates and automatically applies online coupons on eCommerce websites.

History

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Entrepreneurs Ryan Hudson and George Ruan founded Honey[1] in November 2012 in Los Angeles, California, after building a prototype of the browser extension in late October 2012. A bug tester leaked the tool to Reddit, where it went viral.[4] By March 2014, the company had 900,000 organic users.[5]

Honey raised a $26 million Series C round, led by Anthos Capital in March 2017.[6] By January 2018, Honey raised a total of $40.8 million in venture backing.[7]

On January 6, 2020, it was acquired by PayPal for about $4 billion.[8][9][10] Nearly immediately after PayPal acquired Honey, Amazon claimed to its users that the extension was a security risk that sold personal information. A Wired magazine article, written shortly after the acquisition, questioned whether the claim was motivated by PayPal's newly acquired ability to compete against Amazon.[11]

In June 2022, the company was renamed PayPal Honey.[12]

Marketing

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PayPal Honey has become known for its heavy use of YouTube advertising and channel sponsorships for its marketing. Similar to NordVPN, Amazon's Audible and Raid: Shadow Legends, Honey has sponsored hundreds of popular YouTube channels such as MrBeast and Marques Brownlee to advertise the extension to its viewers. Videos sponsored by Honey have amassed hundreds of millions of views on YouTube each year.[13]

In 2019, the company became a shirt sponsor of the NBA team, Los Angeles Clippers.[14]

In 2020, PayPal Honey launched a web series called "Honey Originals", where Honey partners were interviewed, including segments "20 Questions with _" and "Add To Cart with _".[15][16]

Revenue

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PayPal Honey's revenue comes from a commission made on user transactions with partner retailers.[17] When a member makes a purchase from merchants partnering with the company, Honey shares part of their commission with the member in a cashback program.[18] Users are notified of price drops and price history on selected items sold by participating online stores.[19]

Controversies

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In June 2018, competitor RetailMeNot sued Honey over patent infringement.[1] Within the litigation document, they claim "the Honey website redirects the user via an affiliate network link containing a unique identification number that corresponds to Honey, as shown by the [...] HTTP requests."[20] RetailMeNot claims that this redirection, along with other algorithms that Honey utilizes, violates multiple software patent laws; they claim that as a result, Honey is, "actively encouraging [their users] to use and obtain benefits from using Honey’s infringing system." The document also states, "the inventor [of the patent] had the insight that offer redemption and commission or referral rates would dramatically increase if the selection of a promotional offer were accompanied by automatic direction of the client’s browser through the appropriate affiliate- or referral-network," [20] which has become a concern expressed by online users regarding the potential predatory nature of Honey's practices in which its users are unaware that referrals are instantly changed to refer to Honey. [2]

In December 2024, MegaLag, an investigative YouTuber,[21][22] released a video[23] detailing PayPal Honey's marketing claims as being deceptive. The investigation alleged that the company's claims of being a reliable tool to find the best deal were not only untrue, but wholly incorrect. The video examines Honey's claims of saving consumers money through coupon applications, presenting it as a reliable tool. However, the investigation reveals that the extension often fails to find effective discounts and primarily offers codes from partner stores who are allowed complete control over the coupons that can be used via Honey, which raises concerns about its legitimacy.

MegaLag highlights how Honey replaces influencer affiliate links with its own tracking cookies during checkout, diverting commissions from influencers to Honey, ultimately causing significant financial losses for content creators, particularly those who rely on referral links as a main source of income. At the checkout stage, Honey intentionally produces prompts to the user, regardless of whether or not the extension finds coupons for the retailer, that when clicked, replace affiliate links with their own, siphoning off commissions from content creators and marketers despite having absolutely no part to play in the purchase process. Honey also provides a "Pay with PayPal" button (even though the retailer or merchant may have that option) that similarity injects PayPal's affiliate link, replacing previous links. The investigation further reveals that Honey may withhold more valuable coupons from shoppers, delegitimizing the company's marketing claims[24].

This practice allegedly negatively impacts consumers by leading them to believe their browser extension searches for the best coupons, when in reality the coupons shown can be controlled by any company partnering with Honey[25]. If a company partners with Honey, they have control over the content hosted on the Honey platform. This means that if a better discount is discovered by Honey crawling the web, they may not apply a better coupon if a partnering company has indicated they only want certain coupons on the Honey platform[26].

References

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  1. ^ a b c d Metcalf, Tom; Verhage, Julie (January 28, 2020). "Coupon Duo Now Worth $1.5 Billion After Honey's Sale to PayPal". BloombergQuint. Archived from the original on December 9, 2020. Retrieved January 28, 2020.
  2. ^ ({URL="https://www.equitynet.com/c/honey-science"})
  3. ^ Vincent, Roger (August 1, 2018). "Online coupon firm Honey taking over historic Coca-Cola plant in Arts District". Los Angeles Times. Retrieved January 3, 2019.
  4. ^ Shontell, Alyson (January 16, 2013). "New Coupon Startup 'Honey' Has Had 9 Successful Investor Meetings in a Row". Business Insider. Retrieved September 26, 2022.
  5. ^ Perez, Sarah (March 25, 2014). "Honey Introduces a Universal Cart for Online Shoppers Where Savings Are Automatically Applied". TechCrunch. Retrieved September 26, 2022.
  6. ^ Pierson, David (October 24, 2017). "L.A. Tech: Can't find a coupon code? This L.A. start-up does all the work for you". Los Angeles Times. Retrieved September 26, 2022.
  7. ^ Ketchum, Dan (April 11, 2019). "Got a Problem? Turn it into a Business Like These 15 Companies". GOBankingRates. Retrieved September 26, 2022.
  8. ^ "PayPal Completes Acquisition of Honey" (Press release). PR Newswire. January 6, 2020. Retrieved September 26, 2022.
  9. ^ Taulli, Tom (November 23, 2019). "Why PayPal Paid $4 Billion for Honey Science". Forbes. Retrieved January 28, 2020.
  10. ^ Peters, Jay (November 20, 2019). "PayPal acquires the company behind the Honey deal-finding extension for $4 billion". The Verge. Retrieved February 25, 2020.
  11. ^ Lee, Dami (January 9, 2020). "Amazon suspiciously says browser extension Honey is a security risk, now that PayPal owns it". The Verge. Retrieved February 8, 2022.
  12. ^ "What is PayPal Honey?". PayPal Honey. June 29, 2022. Archived from the original on September 26, 2022. Retrieved September 26, 2022.
  13. ^ Weiss, Geoff (November 21, 2019). "Browser Extension 'Honey', a Frequent Shane Dawson and MrBeast Sponsor, Acquired for $4 Billion". Tubefilter. Retrieved June 11, 2020.
  14. ^ "What is 'Honey' on the Clippers' uniforms? Explaining LA's jersey sponsorship patch". www.sportingnews.com. April 18, 2023. Retrieved April 20, 2023.
  15. ^ 20 Questions with MrBeast | Honey Originals. Honey. July 1, 2019. Retrieved September 26, 2022 – via YouTube. Archived at Ghostarchive and the Wayback Machine.
  16. ^ Add to Cart with Gibi ASMR | Honey Originals. Honey. March 21, 2020. Retrieved September 26, 2022 – via YouTube. Archived at Ghostarchive and the Wayback Machine.
  17. ^ Rey, Jason Del (April 2, 2018). "Honey — the under-the-radar coupon startup — has held talks to raise around $100 million in a new investment". Recode. Retrieved January 13, 2024.
  18. ^ Kane, Libby (November 17, 2017). "A struggling dad built an app to buy his kids cheaper pizza — and now his company has 5 million downloads and $40 million". Business Insider. Retrieved January 3, 2019.
  19. ^ Ellingson, Annlee (January 31, 2018). "How Honey helps users keep their New Year's resolution to save money". American City Business Journals. Retrieved September 26, 2022.
  20. ^ a b https://insight.rpxcorp.com/litigation_documents/13422145. {{cite web}}: Missing or empty |title= (help)
  21. ^ "SpaceX Starlink Powers Incredible Mobile Office at Park [VIDEO] • iPhone in Canada Blog". www.iphoneincanada.ca. November 11, 2021.
  22. ^ "DHL Responds to YouTuber Who Sent AirTags to North Korea [VIDEO] • iPhone in Canada Blog". www.iphoneincanada.ca. December 21, 2022.
  23. ^ MegaLag (December 21, 2024). Exposing the Honey Influencer Scam. Retrieved December 22, 2024 – via YouTube.
  24. ^ "Automatic Coupons, Promo Codes, and Deals | Honey". web.archive.org. December 21, 2024. Retrieved December 22, 2024.
  25. ^ MegaLag (December 21, 2024). Exposing the Honey Influencer Scam. Retrieved December 22, 2024 – via YouTube.
  26. ^ "get.joinhoney.com/business/faq/". web.archive.org. Retrieved December 22, 2024.

See also

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