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Honey Saves You Money – But At What Cost?

Last edited: February 20, 2020
Reading time: 14 minutes, 23 seconds

Honey logoOnline shopping keeps growing in popularity. That isn’t very surprising. It’s so easy to click ‘buy’ and have a package arrive on your doorstep the next day. There are plenty of online discounts to be found, too. A $20 discount on the latest Nintendo, 10% off on your favorite shirts – every dollar saved is a dollar won. This is where extensions such as Honey step in. These programs check the internet for active coupon codes and discounts on the products you’re about to buy so you’ll never spend too much. Sounds useful, but is Honey really as amazing as it sound?

In this article we’ll tell you more about Honey, how it works during online shopping, how they make their money, and how this free money-saving app treats your personal data and privacy.

What is Honey?

Honey is an app and browser extension that helps you save money as you shop online. It was founded in 2012 in the USA. Honey searches the internet for existing coupon codes that will make the products you want to buy cheaper. There are many apps that work in a similar way, such as PriceScout and InvisibleHand. Honey, however, currently is the most well-known one.

Money-saving apps search the web for the best deals. Their goal is to make online shopping as cheap and fast as possible. Honey, specifically, has both an app for your phone and tablet and a browser extension for your computer. The extension runs in the background of your browser, so you’ll only see it when you need it. Whenever you’re shopping online, you can click the Honey extension at the top of your browser to see which discounts are available.

How Honey works

Honey money savedHoney makes several changes to your internet experience. Firstly, it adds buttons to the webpages you visit, most notably those in web shops. With these buttons, you’ll be able to save a certain product to your “droplist”. This means Honey will keep checking the price of that product and notify you if it drops below a certain point, so you’ll be able to buy it when it’s cheaper.

Another option can be found on Amazon, the massive online marketplace that closely cooperates with Honey. On there, Honey will check whether the price you’re paying for a certain product is the cheapest one on Amazon. Sometimes, the same product is uploaded to Amazon multiple times, each entry with a different price. With Honey, you’ll always find the cheapest option without having to go out looking for yourself.

Even beyond Amazon, Honey will be able to help you out. Once you’ve filled your shopping cart on a web shop and find yourself at check-out, simply click the Honey logo in your browser. Honey will find you the best coupon codes. A simple and useful app, so it seems. But the question is: what’s the catch? Honey now has over 17 million members. How did they get this successful? And where did they get the money to run a business if their services are truly free?

Honey’s advertising: YouTube

If you’ve heard of the Honey extension before, chances are that’s because they’ve worked with one of your favorite online influencers. Honey has been sponsoring countless famous YouTubers, who will then talk about the extension in their videos. They might mention the incredible discounts they were able to find with Honey, urging viewers to download the extension, which “only takes two clicks”. Here’s an example of such a sponsored video, in this case by MrBeast, a famous YouTuber with almost 30 million subscribers.

Aside from directly contacting influencers, Honey also markets their services by buying advertisements on YouTube. You might have seen these ads at the start (or right in the middle) of a video. Because of their ads and sponsorships on platforms such as YouTube, Honey has been able to grow their brand and gain thousands (if not millions) of new users.

Honey and Money

Honey might be a free extension, but that doesn’t mean it doesn’t deal with money at all. Some of the videos sponsored by Honey have been sponsored for tens of thousands of dollars. In late 2019, PayPal revealed that they were buying Honey for $4 billion – their biggest acquisition so far. How can free software become so valuable?

How Honey makes money

Any successful business has a financial strategy: a way in which they make their money and are capable to continue to exist. Honey’s strategy has to do with commissions and affiliates. Their partners, the sellers whose discount codes you use, provide them with a commission when a Honey member buys something using a promotion code. In other words, if you buy something from webshop X using Honey’s code, Honey will receive money from webshop X. This way, so they claim, they’re able to keep Honey free without selling any of their user’s data.

Honey clearly is more than a simple database for coupon codes. Many websites, shops, and other businesses have struck deals with Honey. These deals, resulting in commissions for Honey, create the extension’s biggest form of income. In other words, the codes used by Honey aren’t just general codes you pick off the internet. They’re active promotions that help the people working at Honey make a living.

Honey Gold

Moneybag with dollar sign on computerInstead of just providing you with discount codes, Honey goes a step further. They have a special loyalty program that allows you to earn points. The more often you use the extension, the faster you’ll gain ‘points’ in this system, which is called Honey Gold. Once you have enough points (1000 Honey Gold), you can exchange them for gift cards at all kinds of online stores, including Amazon and eBay.

This simple reward system creates a sense of loyalty with users. They want to get that Honey Gold so they’ll be able to get a gift card – and so they will continue using Honey.

Why PayPal bought Honey

PayPal bought Honey back in late 2019. The acquisition happened for no less than $4 billion. Honey released a statement about how this would affect members. Most notably, they’ll be able to cooperate with more merchants and offer more payment options. Users will now also be able to join Honey through their PayPal accounts. Moreover, Honey explicitly mentioned that there won’t be any changes to the way they handle their users’ privacy. We’ll look at this more closely in the following section.

For Honey, becoming part of the PayPal family clearly will come with several advantages. So what does PayPal get in return for this deal? Honey might be free, but that doesn’t mean it doesn’t make any money. As mentioned before, Honey earns commissions whenever a member buys something using one of their discount codes. Aside from those possible earnings, however, PayPal especially wanted to get its hands on Honey’s technology. According to the company, this technology will help PayPal reach customers and personalize shopping experiences. The question is: how do personalized shopping experiences and privacy go hand in hand?

What Does Honey Know About You?

In a world where nothing is ever ‘free’, having a free extension like Honey that doesn’t profit from you in at least some way sounds impossible. What’s going on here? We looked into it.

Collecting user data

In order to make their service function, Honey needs to collect user data. After all, it needs to know where you are on the internet in order to be able to provider you with the right kind of discounts. However, because Honey has grown to become much more than a simple discount finder, they gather a lot more user data, for example through cookies. When you install the extension, you see the following screen, encouraging you to create an account.

Creating an account with Honey

If you choose to create a Honey account, the app will be able to gather more information about you. What exactly do they know? In their privacy policy, they mention collecting:

Personal information:

  • Your login, if you choose to use it (including your email, username, password)
  • Any data you opt to share on your profile, such as your name, social media links and profiles (if you log in with your Google or Facebook account, they’ll be able to look at these accounts, but only if they’re publicly available)
  • Any communication with Honey through email or via other means
  • Bank or credit card information if you provided it through the Honey Mobile App or Honey Pay
  • Items you add to your Droplist
  • Coupons, promo codes, and deals you shared with Honey
  • Friends you refer to Honey
  • Stores you choose to follow using the Honey tracker

Technical information:

  • The type of device
  • Your device’s unique ID
  • Its operating system
  • Your browser type
  • IP address
  • Event stamps
  • Error logs

As you can see, much of the personal information they gather depends on whether or not you share it with them. The more you share, the more effective the app will be, and the less privacy you’ll have. Sometimes the data they collect is anonymized and aggregated in order to help them analyze their services.

On the flip side, Honey promises never to track your search engine history, emails, or your browsing on any site that isn’t a retail website.

On pre-approved retail sites, Honey will collect information about that site (the retailer’s name, page views) as well as pricing and availability of items. They might use this information and the information they have gathered about you to give you personalized recommendations, such as showing sponsored product offers. In other words, they track your shopping habits and adjust your online shopping experience accordingly.

Sharing user data

Businessmen shaking handsHoney promises never to sell your personal data. One could argue that ‘personal data’ doesn’t cover all the data they gather: is information about the products you buy or look for actually personal? This info, also called metadata, can be very valuable. The fact that Honey uses it to show you personalized offers and a tailored experience already attests to this. Still, according to their privacy policy, Honey doesn’t sell this information. They will, however share it with different parties, including:

  • Their service providers, which help them with maintaining their products, marketing, legal issues, security protection, payment processing, and so on
  • The stores you buy at, which will need your shipping information to be able to send you your purchased product (but only when you’re using the Honey Mobile App)
  • Their parent company, PayPal, and its affiliates and subsidiaries

Apart from those, Honey might also share information with other parties, for example when they’re required to by law. They might also share anonymized data with others. A final mention they make regarding this topic, is that they might share information “when [they] believe in good faith that it’s necessary to protect [their] rights, protect your safety or the safety of others, or investigate fraud”. Although this statement is likely intentionally vague to cover any unsuspected situations, it also gives Honey plenty of room to share user data, in case they wish to.

All of this information can be found in the company’s privacy policy, which is openly available on their website. Honey collects and shares quite a lot of your information, which could be a problem if you value your online privacy. However, at least Honey is open about their policies.

Does Honey Follow Your Every Move?

With Honey’s customized recommendations for users, you might be wondering to what degree they study your online behavior. What information do they use to give you personalized offers? Some people wonder whether Honey is actually a form of spyware that tracks everything you do online, just to be able to profit from it. The company heard these concerns and answered with a special YouTube video. In this video, they perform a lie detector test on their employees.

The employees talk about how they don’t sell your personal data, such as your email address. They reiterate that Honey makes money through commissions and admit to using the service themselves. This video was a smart marketing move, as it plays into the recent popularity of lie detector test videos online. Whether it’s actually useful in terms of finding out how truthful Honey is being, remains open to discussion. The footage could be edited, after all. Moreover, while the extension might not sell your data, this doesn’t mean it can’t see your data for themselves – which it can.

Is Honey spyware?

Eye on LaptopIn order to get to the bottom of this, we investigated the matter ourselves. Some people fear that Honey might be spyware. Spyware is a form of malware that infects your computer, smartphone, or other device and gathers information on you. It literally spies on you as you use your device, tracking your browser history, download history, any personal information such as login data and bank details, and your emails.

Usually, spyware will significantly slow down your device. Since the malware is constantly logging everything you do, it’ll use up a lot of working memory. Browsing, streaming, clicking around will all take significantly longer. When we installed Honey, this wasn’t the case.

To make sure, we looked into the active processes on our computer to figure out whether Honey’s software was active in the background of the device. This wasn’t the case. In short, Honey isn’t a form of spyware, even though it does collect your data, as mentioned above and in their privacy policy.

Honey’s activity in your browser

We can conclude that Honey doesn’t follow every single move you make on your device. In this way, it doesn’t impact your general safety and privacy. However, since it’s a browser extension, it would be interesting to see how it works within the browser. We installed Honey on the Firefox-browser and attempted to see how much the program tracks. By looking at our browser’s task manager, we could see how active Honey was during our browsing.

Honey is a browser extension that appears to be active at all times, although it’ll often only show very little activity. When visiting retail websites, such as amazon, Honey’s energy impact shoots up. This means it’s looking for the right discounts, recognizing that you’ve reached a partner webshop. Nothing out of the ordinary so far: this is exactly what Honey is meant to do.

When visiting nonretail websites, for example our own website or any other informative pages found through a Google web search, Honey’s energy impact remains low. Although the app has checked whether the website is a retailer, it doesn’t do anything else when it’s decided that it isn’t. Nothing notable happens when you use social media such as Twitter and YouTube, either. Honey appears not to be tracking your moves on here.

Website visited Honey’s energy impact
Retail website (Amazon) Average/high
Nonretail website (VPNoverview) Low/zero
Social media platform (YouTube, Twitter) Low/zero

Whenever Honey is very active, its memory will grow. This means that the app is saving information about your online shopping behavior, as it’s known to do. While this practice definitely has an impact on your privacy, it isn’t necessarily wrong. After all, by using Honey you agree to allow it to track your online movements and check every web shop you use. The extension builds a profile off of your data, which they use to personalize your experience. That’s why the amount of memory of the extension grows.

Final Thoughts

Honey’s money-saving app is one of the most popular of its kind. The service is aimed at finding the best, most relevant discounts for its users. It also has a cash-back system, where users can earn back part of the money spent on new products using Honey. In order for Honey to be able to function, it has to gather certain personal data. You can opt out of sharing most of this data, such as your email, social media, and other sensitive information. For a regular user, however, Honey will use data to adjust and personalize your shopping experience.

When it comes to privacy, Honey isn’t the best extension to use. If you want to stay anonymous online or simply don’t wish to share your shopping habits with others, we would advise you to stay away from Honey. However, for the purpose the extension was designed for, it does a good job. It doesn’t seem to contain any spyware and only actively goes to work once you find yourself on a retail website or webshop. This extension doesn’t sell your data to marketeers (or anyone else, for that matter), but it does perform the tasks of a marketeer itself. By giving you a personalized experience, it tries to get you to buy more online, so they, and their partner shops, can profit from that. Feel free to use Honey, as long as you’re aware that this company will know a lot about you and how you shop online!

Cybersecurity analyst
David is a cyber security analyst and one of the founders of VPNoverview.com. Interested in the "digital identity" phenomenon, with special attention to the right to privacy and protection of personal data.

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