Bit by Bit is a weekly column focusing on technical advances each and every week across multiple spaces. My name is Adam Conway, and I've been covering tech and following the cutting-edge for a decade. If there's something you're interested in and would like to see covered, you can reach out to me at adam@xda-developers.com.

Unless you've been living under a rock, you've probably heard of the Honey scandal which saw the browser extension insert its own affiliate cookie at checkout, even if the consumer had clicked the link using someone else's affiliate code. It's no secret that much of the online media industry relies heavily on revenue generated from affiliate links, and it can be a great way to support your favorite creators.

First brought to light by YouTuber MegaLag, Honey's actions have now seen parent company PayPal faced with a class-action lawsuit started by YouTuber and lawyer Devin "LegalEagle" Stone. But what exactly did Honey do? Why is there now a class-action lawsuit?

How Honey allegedly stole from creators

When creators review products or link to products online, those products will typically be associated with an affiliate code that tells Amazon (or whatever the marketplace is) who sent you there, which is then stored as a cookie in your browser. The person who sent you there, once an order is completed and shipped, will then get a kickback with a certain percentage of the cost of the item going to that person.

This process doesn't shift any additional costs to the consumer, meaning that if you can, it's always worth looking for an affiliate code for products you want to buy so you can support your favorite creator. Otherwise, Amazon (or whatever site you're using) will simply keep what would have been the commission as additional profit.

With that out of the way, Honey's entire purpose is to find coupon codes online and insert them into your checkout, aiming to get you the best deal when you're buying things online. Ordering a pizza from Domino's and want the best deal? Honey can scout for coupon codes. Buying a new monitor on NewEgg? Again, Honey can look for a code for you. Honey's business model will then see it receive a commission on participating sites. If that were all it did, there wouldn't be a problem, but it's worse than that.

When you click a link from your favorite creator to buy a product based on their recommendation, Honey will check for a coupon code still at the checkout, but it will then insert its own affiliate code as the affiliate cookie in your browser. It even does this when it doesn't have any coupon codes to offer the consumer, popping up to say it "checked" and couldn't find any. Most sites operate commission based on a "last click" basis. If you click a link from XDA, add the item to your cart, then click another link to the same site from Linus Tech Tips later on and complete the purchase, Linus Tech Tips will get the commission, not XDA, as LTT was what pushed cart completion on the consumer's end.

All of this makes total sense and is completely fair, as cart completion rate is a common metric used in e-commerce. Getting the consumer over the line of actually making the purchase can be a considerably difficult step, so the last click being what gets the commission is the fairest way to do it. However, what Honey did was simulate the last click, where it opened up a link in the background, replaced the tracking cookie with its own, and meant that Honey received the commission instead of the creator that actually sent you there.

Honey did more than just replace affiliate cookies

Since the original story broke, numerous creators have come forward with their own experiences. As an example, Theo Browne, creator of T3, has since talked about the coupon code he received from Affinity that viewers of his channel could use to get a percentage off which was later co-opted by Honey. Affinity doesn't have a proper affiliate system, but Browne was set to receive a commission whenever the code was used. Browne noted that the number of sales with the code didn't make sense, and ended up refusing much of the money that was "owed" to him, settling instead on a more reasonable figure. The coupon code has now been discontinued as a result.

But where things get arguably worse is with "Honey Gold." Honey Gold is a cashback program where you can receive points to redeem for other things online. In MegaLag's video, he joined the NordVPN affiliate program and purchased two subscriptions; one using Honey, and one without. Where he didn't use Honey, he received a $35 commission. When he used Honey and enabled Honey Gold, the commission went to Honey instead and he received 89 Honey Gold points, equivalent to $0.89.

Given that commission is paid based thoroughly on the presence of a cookie placed in a person's browser, Honey took advantage of this to replace the cookie in the browser to claim the affiliate money instead. Coupled with the fact that it then paid very little back to people after doing that (in the case of Honey Gold and NordVPN), it's no wonder that content creators and consumers feel hard done by.

MegaLag has said there's more to come as his video was the first in a three-part series, and it seems that it may touch on more examples of similar stories to what Browne experienced.