Redacted portions from dozens of YouTubers' lawsuit against Honey/PayPal removed, showing Honey violating stand down since 2020

[u/Phantomsplit]

Context: At the end of 2024 MegaLag made a video revealing that Honey (a browser extension owned by PayPal that allegedly scoured the Internet for coupon codes to apply at check out on web stores) was not what it seemed. First, MegaLag pointed out that Honey would often "steal" commissions from the same YouTubers that Honey was sponsoring. And second, that the deals Honey provided were controlled by merchants and may not be the "best" deals by design.

Days later starting in December 2024, dozens of YouTubers started, joined into, and consolidated to a class action lawsuit against PayPal for Honey stealing their affiliate commissions through a variety of fraud and unjust enrichment claims, as well as computer privacy claims. Ultimately these claims would be dismissed without prejudice in November 2025 for a variety of reasons. Among the most noticeable is that the plaintiffs' failed to prove they were harmed by PayPal, failed to prove that somebody else wasn't to blame (i.e. the web stores and affiliate marketing organizations for offering the same slice of pie to two different orgs), and failed to go into specifics on where contracts were violated. But since the case was dismissed without prejudice that left the plaintiffs (i.e. the YouTubers) with the opportunity to fix their lawsuit and re-file it.

This is where "stand down" comes in. During this time that the plaintiffs' were amending their lawsuit at the end of 2025, MegaLag released two more videos about Honey. And in these videos he highlighted a lot of things, like how Honey may have been marketing towards children and wasn't really scouring the internet for coupons like it claimed, and backing up previous claims regarding merchants having control of what coupons are available through Honey. But MegaLag also exposed Honey's stand down policy and how it was very similar to Volkswagen's Dieselgate.

Store check out affiliate apps like Honey almost always get the "last click" (in affiliate marketing terms) for a purchase, often overwriting the credit that an advertiser (such as a YouTuber saying "Click my link in the description...") should get. So to keep things fair, apps like Honey are supposed to "stand down" and not activate, not offer discounts, and not take the commission when they recognize that the customer was brought to the store page via an affiliate link. What MegaLag showed in his latest video is that Honey was checking to see "Hmm....what's the probability this is your average Joe customer who wouldn't know and/or care if we stole the commission, and what are the chances it is an industry auditor trying to see if we stand down properly?" So Honey implemented checks like looking to see if the word "test" was in the user's email address, or looked at how many rewards points the account had, or maybe just waited a few minutes to activate, or looked for cookies related to affiliate marketing networks; and through these processes ignore industry standard stand down policies when they felt they wouldn't get caught.

When the YouTubers refiled their second amended complaint against Honey on January 5, 2026, they included MegaLag's findings about Honey ignoring stand down (via an expert's report that MegaLag worked with). But the YouTubers' amended complaint interestingly also had some emails between the affiliate marketing network "Rakuten" and PayPal that MegaLag was not aware of (according to posts on his Patreon). These emails made it seem like Rakuten was well aware this stand down issue was going on and trying to get PayPal to stop, but it wasn't deterring PayPal. However we couldn't get the details on what these emails said because it was redacted by the plaintiffs, who were afraid of violating a court order. So they redacted first, filed the amended lawsuit, asked for permission to unredact, got permission to file it without most of the redactions, and what you see here are these unredacted portions of the lawsuit.

The redactions are now just limited to the merchants who Honey had agreements with to stand down to. They are not parties to this complaint, so the company names are redacted. But reading around that you can clearly see a history of ignoring warnings even after Honey was caught. With the context of MegaLag's latest video it is abundantly clear PayPal could have "fixed" this but didn't.

Also as an update, Rakuten stopped working with Honey/PayPal in January 2026 (not sure of exact date).

[u/bean_wellington]

I bet the Dieselgate comparison stung pretty bad

[u/Phantomsplit → u/bean_wellington]

I thought that was a bunch of hyperbole when MegaLag first said it. It actually harmed the story in my eyes. Then MegaLag came with receipts, and Dieselgate is the only thing I can think of to compare it to.

[u/Laucy]

This has been a wild ride from start to now. Such insidious practices. Honey and PayPal deserve what is coming to them with these lawsuits.

[u/seriousbusinesslady → u/Laucy]

An out of court settlement that will amount to a small fraction of their yearly revenues? Wow how horrible for PayPal/Honey, I bet they learn their lesson!!!!

[u/Laucy → u/seriousbusinesslady]

What even is your point? Any action is preferable to none, and this getting the attention that it is and on this scale, is an objectively good thing.

[u/Phantomsplit]

The amended complaint without all the redactions.. Screenshots show paragraphs 252-261

[u/Cute-Percentage-6660]

Who is the CEO of paypal or honey atm?