One of Silicon Valley’s most renowned tech firms is allegedly playing online influencers who make money from selling products on the internet, according to a new complaint.
” It involves virtually every high-profile father that I can think of, including myself”, technology influence Marques Brownlee, who has about 20 million subscribers on YouTube,  , said in a movie this year.
San Jose , tech giant PayPal , uses “deceitful and clandestine” methods to steal money from social media influencers and other creators of online content, the class-action lawsuit filed Thursday in San Jose U. S. District Court by five online-content companies representing influencers alleged.
Thousands of content creators allegedly fell victim to what the lawsuit called “fraudulent business practices” that involved the funneling of millions of dollars worth of creators ‘ commissions to PayPal.
The issue is with PayPal’s free Honey internet-search browser extension, which the company claims will search the web for the best discount coupons before applying them to online purchases. Google’s Chrome web store shows , Honey has 17 million users.
PayPal, which , bought Honey in 2020 for$ 4 billion, did not answer detailed questions Friday from this news organization but said in a statement that it disputed the lawsuit’s claims.
PayPal stated that” Honey is free to use and offers millions of shoppers with additional savings on their purchases whenever possible.” ” Honey follows industry rules and practices”.
A mid-December , video exposé by a tech-journalist YouTuber , that led to the lawsuit shows a series of high-profile social media influencers— including MrBeast, arguably the world’s biggest influencer celebrity — hyping Honey online to millions of viewers with statements such as,” Honey will find every working code on the internet and apply the best one to your cart”.
In a process known as “affiliate marketing,” 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.
But when a discount-hungry viewer who has installed Honey uses an influencer’s product link to buy something and then clicks on Honey to seek discount codes, the extension diverts credit for the sale to PayPal, allowing the company — valued at$ 87 billion in the stock market — to steal the influencer’s commission, the lawsuit alleged.
Such theft can occur even when Honey tells a shopper no coupons are available, but they buy the product anyway, the lawsuit claimed.
According to the lawsuit, PayPal also offers Honey Gold, a system that gives customers PayPal Rewards points that can be used to purchase gift cards. However, when a shopper gets points worth a small amount— even less than a dollar — from a purchase, PayPal may snatch a$ 35 commission that should have gone to the creator, the lawsuit alleged.
The practices PayPal is alleged to have engaged in could undermine the foundations of online shopping, according to Josh Sanford, a lawyer for the plaintiffs. However, the lawsuit does not allege that online shoppers were defrauded.
” PayPal has grown the world of e-commerce, which is great for everyone”, Sanford said. He added that if the allegations were to come out as true, they would have made e-commerce more difficult because it would make vendors and customers less able to trust one another and be less confident in their understanding of the terms of their agreement.
According to the lawsuit, the five content-creation companies suing PayPal all profit from online sales of goods.
According to the lawsuit, the Los Angeles-based Businessing runs several YouTube channels for musician and artist Ali Spagnola, with one channel having 2.25 million subscribers. Wendover Production of Colorado has several educational YouTube channels, one with 4.7 million subscribers. The Charismatic Voice, of Arizona, with nearly 2 million subscribers, was founded by opera singer Elizabeth Zharoff— who has performed at Palo Alto’s West Bay Opera — and offers resources for aspiring and professional vocalists. With more than 3 million subscribers to one of its channels, Clearvision Media of Nevada produces educational content for online creators. Washington-based Gear Live Media covers tech and gadgets, with more than 400, 000 people subscribing to founder Andru Edwards ‘ YouTube channel.
A first version of the lawsuit, filed Dec. 29, included only Wendover and Businessing as plaintiffs.
PayPal was accused of interfering with contracts and financial transactions and unfairly enriching itself in the updated lawsuit filed on Thursday. In order to attract thousands of other creators, the content creators want a court order granting class-action status. They are asking for unspecified damages as well as a court order to stop PayPal from allegedly stealing commissions from online sales.
Brownlee had this advice for YouTube viewers:” Uninstall Honey”, Brownlee said. ” Warn people not to install Honey”.
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