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Why did Rakuten ban Honey and what does it mean for PayPal’s reputation?
Rakuten Terminates Honey: A Strategic Analysis of the Affiliate Fraud Allegations
PayPal’s browser extension, Honey, faces a critical operational crisis. Rakuten Advertising, a dominant global affiliate network, officially terminated Honey’s access to its platform. This decision cuts Honey off from thousands of merchants and revenue sources effective immediately. While the official notice cites the maintenance of “high standards of quality,” industry analysts point to specific technical violations regarding commission attribution.
The Technical Violation: Selective Stand Down
The core issue involves “stand-down” protocols. In affiliate marketing, software must not overwrite the tracking cookies of other publishers. Harvard researcher Ben Edelman indicates Rakuten removed Honey for “stand-down violations and concealment of intentional-non-stand-down.”
Investigative reports identify a mechanism within Honey’s code dubbed a “defeat device” or Selective Stand Down (SSD). This script checks a user’s Device ID. If the ID matches a compliance tester, Honey behaves correctly. If the ID belongs to a regular user, Honey allegedly ignores stand-down rules and aggressively claims commissions. This creates a disparity between audit results and real-world behavior.
Timing of the Code Update
The sequence of events suggests a reactive damage control strategy rather than proactive compliance. According to technical analysis by MegaLag:
- The Ban: Rakuten issued the termination notice to merchants.
- The Patch: Honey simultaneously pushed an update disabling the SSD configuration file.
This specific timing indicates PayPal engineers scrambled to deactivate the non-compliant logic exactly as the network enforcement occurred. Removing the mechanism now prevents current detection but does not address historical non-compliance.
Metric Anomalies
Beyond the technical code, Honey’s public performance metrics exhibit unusual patterns. Despite significant reputational damage, lawsuits, and negative user reviews, the Chrome Web Store reports Honey’s user base increased from 12 million to 14 million in a single week. Such growth during a crisis is statistically improbable. Developer Jelte suggests these figures may not reflect organic adoption.
Legal and Reputational Risks
The removal of the “defeat device” presents a legal liability. In litigation, courts often interpret the sudden removal of controversial features following an accusation as a tacit admission of their function. For PayPal, the optics are damaging. The loss of the Rakuten network significantly degrades the extension’s utility for consumers, while the fraud allegations threaten the parent company’s standing in the fintech sector.