A brand new lawsuit claims that online influencers who generate income by promoting products online are being played by considered one of Silicon Valley's best-known tech corporations.
“It affects almost every high-profile YouTuber I can think of, including myself,” said tech influencer Marques Brownlee, who has nearly 20 million subscribers on YouTube. said in a video this week.
San Jose tech giant PayPal is using “deceptive and stealthy” methods to steal money from social media influencers and other online content creators. That's in line with the category motion lawsuit filed Thursday in U.S. District Court in San Jose by five online content corporations representing alleged influencers.
Thousands of content creators have reportedly fallen victim to what the lawsuit described as “deceptive business practices” that diverted thousands and thousands of dollars in creator commissions to PayPal.
It's about PayPal's free Internet search browser extension “Honey”, which is designed to look the Internet for the very best discount vouchers and apply them to online purchases. Google's Chrome web shop shows Honey has 17 million users.
PayPal, that bought Honey in 2020 for $4 billiondidn’t answer detailed questions from this news organization on Friday, but said in a press release that it disputes the lawsuit's allegations.
“Honey is free to use and provides millions of shoppers with additional savings on their purchases whenever possible,” PayPal said. “Honey follows industry rules and practices.”
One in mid-December Video exposé from a tech journalist YouTuber That led to the lawsuit and shows how a lot of high-profile social media influencers – including MrBeast, arguably the world's biggest influencer celebrity – hyped Honey to thousands and thousands of viewers online, with statements like: “Honey will find any working code on the internet and apply.” the best in your shopping cart.”
Many influencers recommend products to their viewers and receive payment when a viewer purchases one of those products – through a link provided by the influencer – in a process known as “affiliate marketing.”
But when a discount-hungry viewer who has Honey installed uses an influencer's product link to purchase something and then clicks on Honey to search for discount codes, the extension forwards the credit for the sale to PayPal and enables the company , whose stock is worth $87 billion in the market – to steal the influencer's commission, the lawsuit says.
Such theft can occur even if Honey tells a shopper that no coupons are available but they purchase the product anyway, the lawsuit says.
PayPal also offers Honey Gold, a system that awards consumers PayPal Rewards points that they can redeem for gift cards, the lawsuit says. However, if a buyer earns a small amount of points from a purchase – even less than a dollar – PayPal may collect a $35 commission that should have gone to the creator, the lawsuit says.
While the lawsuit does not allege that online shoppers were defrauded, the practices PayPal allegedly engaged in could undermine the foundations of online shopping, said Josh Sanford, an attorney for the plaintiffs.
“PayPal has expanded the world of e-commerce, which is great for everyone,” Sanford said. However, he said: “If the allegations prove true, they’ll have made e-commerce tougher because it’ll make sellers and consumers less trusting of one another and fewer confident that they understand the terms of their transaction.”
The five content creation corporations suing PayPal all generate income from selling products they promote online, the lawsuit says.
Los Angeles-based Businessing operates multiple YouTube channels for artist and musician Ali Spagnola, with one channel having 2.25 million subscribers, the lawsuit says. Wendover Production of Colorado has several YouTube learning channels, one with 4.7 million subscribers. Founded by opera singer Elizabeth Zharoff, who performed with the West Bay Opera in Palo Alto, Arizona-based The Charismatic Voice, with nearly 2 million subscribers, provides resources for aspiring and skilled singers. Nevada-based Clearvision Media produces educational content for online creators, and considered one of its channels has greater than 3 million subscribers. Gear Live Media, based in Washington, covers technology and gadgets. More than 400,000 people have subscribed to founder Andru Edwards' YouTube channel.
An initial version of the lawsuit filed Dec. 29 listed only Wendover and Businessing as plaintiffs.
The updated lawsuit filed Thursday accuses PayPal of interfering in contracts and financial transactions and unjustly enriching itself. Content creators desire a court order granting class motion status to incorporate 1000’s of other creators. They are looking for unspecified damages and a court order prohibiting PayPal from allegedly diverting commissions from online sales.
Brownlee had this recommendation for YouTube viewers: “Uninstall Honey,” Brownlee said. “Warn people not to install Honey.”
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