The Philip DeFranco Show - The Honey Scandal Exposed an Even Bigger Problem

Starting point is 00:00:00 And then there's more we gotta dive into in just a minute, but first let me thank a sponsor and say, you know, August is a great time for a reset before fall gets chaotic and my closet, it could use some adult supervision. That's where today's sponsor, Quince comes in. Quince makes fewer better pieces from premium materials, the things you'll reach for constantly. And I really like their staples like organic cotton teas and Mongolian cashmere sweaters at work all day and into the evening. Or basically, clothes that make you look put together without looking like you spend an hour planning it. Their denim and Taylor Chino start at 60 bucks with a fit, structure, and quality that you'd expect from a luxury designer brand. And then you've got things like the cotton silk short sleeve crewneck sweater.

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Starting point is 00:00:57 So hey, upgrade your everyday by scanning that QR code or going to quince.com slash defranco for free shipping on your order and 365 day returns. And they're now available in Canada and the UK as well. So that's QU-I-N-C-E dot com slash defranco. Quince.com slash DeFranco. We've got to talk about these wild honey scandal updates and how it seems to have exposed an even bigger problem. Trump secretly fled Air Force One because of a threat, but he left journalists and even his top officials behind his decoys. And there's now even more backlash after people learned how Israel was involved. and 5,000 sailors and marines have been stuck at sea for 250 days,

Starting point is 00:01:29 but the Pentagon's biggest concern has been denying just how miserable things have gotten on board. We're talking about all of that and even more on today's brand new Philip DeFranco's show you daily dive into the news, starting with this. This whole honey PayPal scandal that initially blew up a couple of years ago after a YouTuber accused them as stealing money from creators, one, it's very possibly about to get way worse for them, and we've got some major updates in that story that we've got to talk about. But also, two, it exposed an even bigger problem.

Starting point is 00:01:54 Right, because apparently a number of people in Silicon Valley did not learn a damn lesson from it. Though the scheme that we're talking about this time isn't with PayPal, but rather, Bia. And if you're not familiar, it's this e-commerce startup that was founded by Sophia Keani and Phoebe Gates, who's the 23-year-old daughter of Bill Gates. A businesswoman who's been very vocal about not long ago setting out to prove that she can become a successful capitalist without any help from her billionaire daddy. I have a chip on my shoulder to build something generational that has no ties to, you know, me, my privilege, or my last name. And it looks like she's done well so far, raising over $40 million from venture capital firms as well. as well as from celebrities like Sidney Sweeney, Chloe Kardashian, and Haley Bieber.

Starting point is 00:02:27 Well, I'll let you decide if she's done all that without the help of her last name or the connections that come from it. What she hasn't done is do it without breaking the law, at least, according to Bloomberg. Right, because for some important background and context here, Fia is this browser extension that's supposed to help you find the best deals when you're shopping at at checkout. It looks for discount codes that you can use. Right, and if you plug in one of those codes, then Fia takes a cut from the retailer, right? A commission for driving that sale, and that's generally how affiliate marketing works.

Starting point is 00:02:50 But, according to Bloomberg, when its reporters tested the extension on dozens of websites, Fia took a cut even when it wasn't supposed to. Even if you didn't use one of its recommended codes, it would just automatically open a background tab that replaced any existing cookies with its own and then quietly closed the tab a few seconds later. And so that meant either one, they would get a commission from the retailer

Starting point is 00:03:07 without actually doing anything or two, it would steal the commission from the affiliate who actually drove the sale. So for example, if you clicked on a link to one of my sponsors from this show, then Fia would jump in at the last minute, replace my cookie with its own and walk away with the money that should have gone to me.

Starting point is 00:03:21 And according to Bloomberg, they actually had several ways of doing this. One method that you had Gates reportedly wanting was to drop the cookie as soon as the discount code window popped up, even if you didn't use it. Another was to automatically drop the cookie every two hours on any top 1,000 site that you'd previously visited. And then another was to actually drop the cookie if you clicked literally anywhere on the screen after the pop-up window appeared, even if you clicked to close the window. In Keani's own words, they were just interested in whatever we can do to keep these cookies dropping. And to be very clear with you right now, what is being alleged here? It's not some sneaky, clever little marketing practice. This is illegal. Right, it's called cookie stuffing, which also sounds like another.

Starting point is 00:03:53 thing, but in this context, as you had a corporate attorney, Ariel Givner explaining, it's typically treated as federal wire fraud in U.S. courts and adding, there's a possibility of a max penalty of up to 20 years prison plus fines and restitution. Now, in their defense, you had Fia saying, hey, this whole thing, this is actually the result of a software bug that we only became aware of because Bloomberg pointed it out. Right, wow, whoops, how crazy. Then you had Bloomberg going, oh, wow, that is crazy. Well, then, how do you explain these slack messages showing that you knew about it since at least December? Or because you had Bloomberg obtaining logs appearing to show Gates and her employees talking about dropping cookies to capture every

Starting point is 00:04:25 transaction even if Fia wasn't actually used. And so Fia claimed was just a bug appears to have actually been a feature. And then you also had Bloomberg explaining that it saw the company's internal dashboard with features named stuff like passive trigger and enable coupon auto drop that could be turned on and all. But then also wait, there's more because Bloomberg also got a hold of a conversation between Kiani and an engineer that appears to show clear intent. Right, it's from April 1st and Kiani asked them to make Fia drop a cookie whenever a user closes the pop up. But then you have the engineer being like, wait, what? We're not allowed to drop cookies when someone hits dismiss. But without addressing that concern, Keani said they should definitely do it. And so the engineer said,

Starting point is 00:04:56 again, isn't that against compliance? Right, you had them explaining that Google's policy explicitly prohibits it and that it could put Fia at risk of getting taken off the Chrome Web store. But then, after conceding that they shouldn't drop a cookie just for clicking X, Kiani suggested, I guess we could say that the user is trying to open us and roll it back if they complain? At which point, you have the engineer just replying, lull, okay. And apparently, this scheme, this practice was incredibly profitable for Fia. Or because you had Bloomberg's setting an internal revenue chart showing that after the company disabled its auto drop feature, average daily revenue plummeted from about $80,000 to between $10 and $28,000.

Starting point is 00:05:28 And while you have Fia claiming, oh, this revenue drop was partly due to it disabling most of its monetization efforts at the same time, you also had Bloomberg setting a message from a company data scientist who estimated that cookie stuffing accounted for about half of the merchandise value that Fia took credit for in June. Though there, you had Fia disputing that number, claiming that the scientists used the wrong methodology without going into more detail. And if this whole story, it just sounds oddly familiar, no, you're not going to crazy. Because 19 months ago, you were the tech YouTuber Megalag accusing PayPal of doing

Starting point is 00:05:53 essentially the same scheme using its browser extension, Honey. I've uncovered signs of advertising fraud, affiliate fraud, the illegal collection of personal data, deception, lies, coercion, extortion, the list goes on. Now I'm not going to go into all the details here, because I value your time and I can link to previous coverage, right, and check that out if you want. But the important thing to know is that Honey, like Fia, it would apply discount codes for you at checkout. And also like Fia, it would allegedly drop a cookie, claiming credit, even when it didn't apply a code. And then on top of that, Megalag alleged that Honey would even conspire with the vendors,

Starting point is 00:06:23 right, to show you their discount code while hiding better codes from you. Well, since that, this whole scandal turned into a PR and financial nightmare for PayPal. Because if you look at Google's Web Store, you'll see that Honey's user base shrank from over 20 million to just around 12 million. And now you've Megalag presenting third-party data purporting to show that Honey's merchant partnerships have fallen from around 35,000 to just over 28,000. So that also understates the scale of the actual loss. Right, because some partners are bigger than others, and one of the ones that left was

Starting point is 00:06:49 Apple. Apple alone generated more shopping traffic than Honey's bottom 27,000 partnered stores combined. And you also have been claiming that Honey's collection of discount codes is declined from 90,000 to 50,000, and that at least 10,000 of the remaining codes are expired. You even had Google tightening up its web store policy to prevent affiliate link manipulation in response to all this. And then in the meantime, there's been this class action lawsuit organized in part by legal legal that's seeking at least $5 million from PayPal. We believe that PayPal's honey is a drag on the entire creator economy. If you're a creator and you've ever used an affiliate link,

Starting point is 00:07:22 run a sponsorship or allowed ads, we believe it's possible that Honey has interjected itself and parasitically taken away your attribution. Note first, you had PayPal trying to head this off by arguing that anyone who used its services had signed terms agreeing to arbitration outside of court. But then, what you saw as that last November, the federal judge in the case said,

Starting point is 00:07:40 nah, not buying it. Or which was a victory for the plaintiffs, but only a short-lived one, because then that same judge dismissed the case, telling them that their complaint wasn't strong enough. But then in January, the plaintiffs came back with an updated complaint.

Starting point is 00:07:50 Right, it included merchant contracts, commission percentages, exact losses, and specific examples of affiliate links getting stolen. And so in June, the party is gathering in court again to debate dismissing the suit, and this time Megalag says that things went much differently. Throughout the hearing, Judge Freeman constantly pushed back on PayPal's arguments, challenging them at every turn. To give you an example, at one point, PayPal tried arguing that affiliate IDs don't hold any real intrinsic value, because they're just short strings of numbers and letters.

Starting point is 00:08:16 The judge responded with something along the lines of, Well, you could say the same thing about a dollar bill, to which Richard replied, quote, I don't know how to respond to that. And in my view, that kind of sums up PayPal's whole defense. Well, on June 22nd, Judge Freeman issued her final ruling, and every single claim survive. That is a huge win for content creators and a massive blow to PayPal. So yeah, the case is officially moving forward, which then means the next step is discovery. And that's going to be very interesting to watch because we could see PayPal.

Starting point is 00:08:48 house internal communications and engineering documents as well as its employees getting deposed under oath. And so ultimately, that's where things stand here and obviously we're going to keep our eyes on this because it seems like it's going to get juicy. And then we've got to talk about this insane USS Lincoln situation in Trump's Air Force One switchroo, especially now that we have wild updates. But first, I've got two things for you. One, on August 21st and 22nd, I'm going to be seeing y'all live in Seattle and Portland. And then on August 28th and 29th, I'll be in Boston and Philadelphia with you. And you should definitely grab your tickets right now at crashingouttore.com, especially because we already have shows that getting sold down. So get out from behind that screen, get yourself surrounded by some beautiful bastards and let's crash out together. It's a lot more fun than a PDS. Every show is actually different,

Starting point is 00:09:26 but it's also still newsy. So again, grab your tickets now while you can at crashingouttor.com. I got links in the description. And then two, we'll be right back after a quick break. For those of us still working on something for over a year and you still don't have a website up, I need you to ask yourself this. Are you actually closer to launching than you were six months ago? And I mean that is a real question. That is not enough. Because that is just what happens when the builds, it feels harder than the idea. Squarespace, it makes the build, stupid simple, right? No website, no problem. Today, that changes because Squarespace makes it easy to start selling content, courses, physical or digital products, whatever you've been dreaming up.

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Starting point is 00:10:23 Your free trials waiting for you at Squarespace.com slash fill or just scan that QR code. Today, it's launch day. And actually, when it's ready to fully go live, use code Phil to get 10% off and let them know we sent you. Then, Devon, right back into the news, we've got to talk about how sailors and Marine crew on the USS Abraham Lincoln, they have logged over 250 consecutive days at sea and they still have no clue when they're getting off this ship. And it's led to a severe mental health crisis on board so much so that you have

Starting point is 00:10:47 some trying to jump ship. You've had reports from both military and major news outlets coming out in recent days, and now you've got senators' demand and answers. Right, because these 5,000 sailors and Marines on the Lincoln, they began their deployment back in November, and then, when the war with Iran started, they were directed to help operations in the Middle East.

Starting point is 00:11:02 And while they were initially scheduled to return in May, the deployment's been extended with no announced return date. And this long deployment, with no determined end, it is taking a very real toll on the people on board, because on top of the constant work with the little breaks, the distance and time away from family, there have been major problems on the ship as well. There have reportedly been points

Starting point is 00:11:17 where they had to ration food and had water shortages. There have also been reports of plumbing issues, deck safety concerns, and disrupted mail service. Well, usually you have ships getting regular port calls around every 30 to 45 days. Since this deployment began, the Lincoln has only had two port stops. It reportedly went 208 days without even visiting a port. And while reports about poor conditions on the ship's surface earlier this year,

Starting point is 00:11:37 the Navy denied them in April with Secretary Pete Heggseth, also calling it more fake news. Our sailors deserve and receive the best. But obviously, the concerns have continued. And so in response to these latest reports, you had the Navy issuing a statement explaining that the traditional supply hubs in the Middle East have been disrupted by combat and leadership has had to prioritize, quote, mission critical supplies first food, then hygiene items, then mail.

Starting point is 00:11:56 Datting current reports from the ship confirm continuous access to clean water, functional AC, and healthy meal options. And while you have some skeptical there, still, you have both family members of the crew and members themselves saying that their drained morale is very, very low. Or you would want unnamed sailor, for example, telling stars and stripes, we've just been turning and burning the whole time we've been deployed, saying nothing to really look forward to at this point. All we want is a date home. You also have families, of course, incredibly upset that their parents, kids, and spouses have been gone so long that they miss major milestones. Things like one crew member who had to miss the birth of their own child and still hasn't gotten to meet their baby.

Starting point is 00:12:26 Though you then have others who have more grim upsetting stories. During a recent town hall where family members got to address Navy leadership, one parent reportedly said that her daughter feels like she's never going to come home and think she's going to die on the ship. In the context of an understanding of the Iran war, even that's hurt morale. Or even one family member saying she found it to be difficult to be proud of her sailor when the military is, quote, killing innocent civilians. And a relative, they've also apparently expressed guilt for what he's doing, with one parent telling stars and stripes. We're all tucked in at night in our beds. Meanwhile, our loved ones are out there fighting with no understanding as to what they're defending. And then with all of these issues on board, there have also been multiple reports as sailors and Marines experiencing suicidal thoughts, and in some cases, even attempting to take their own lives. Or you've had both stars and stripes in the military times reporting on incidents where bystanders on the ship had to intervene to stop suicide attempts.

Starting point is 00:13:07 And at that town hall meeting, you had a spouse telling officials that she received a message from her husband saying, he hopes he doesn't wake up tomorrow. And in response, you have the Navy saying it has a network of mental health support, including counselors, spiritual advisors, and medical professionals, adding leadership is continuously conducting assessments to monitor and sustain the psychological readiness of every sailor. We also had one Navy spokesperson telling CNN we have not observed an increase in suicidal ideations or attempts aboard the ship. But obviously, that flies in the face of what a lot of people are seeing. And these reports, they're painting a very bleak and upsetting picture. And so you have leaders in Congress wanting answers. So, for example, you have Senator Ruben Gallego writing, the Department of the Navy must allow a bipartisan congressional delegation to visit the USS Lincoln to conduct oversight investigation into this horrible situation.

Starting point is 00:13:45 You would Representative Mike Levin, adding, our sailors and Marines deserve better than to be pushed past their limits and then left wondering when they will finally get home. And saying, if we don't keep speaking out and fighting for them, we don't deserve to have them fight for us. You even had Senator Richard Blumenthal writing a letter to Pete Heggseth, demanding that he addressed these reports, saying not only do these complaints warrant immediate attention,

Starting point is 00:14:03 but they also raise a broader question. Whether the Navy can sustain the operational tempo now being demanded of its carrier force, particularly as this administration repeatedly commits U.S. forces to conflicts of its own choosing, and increasingly relies on aircraft carriers to sustain those operations. But as far as what you should expect next, you have reporting from earlier this week suggesting that the Navy's been preparing the USS Theodore Roosevelt to relieve the Lincoln, though they didn't give a public timeline. But then this morning is due to all this news

Starting point is 00:14:26 prompting tons of outrage with the Wall Street Journal saying that the U.S. is preparing to send the USS George Washington to replace the Lincoln. And while that report claimed that this was, quote, part of a previously scheduled rotation plan, though many are skeptical there, it also still did not say exactly when this switch would happen. But then that's also not where the controversies with the government ends right now because the president of the United States is now being accused of using members of the press and top cabinet officials as unknowing decoys in a potential Iranian attack on Air Force One. All while you had Trump himself secretly fleeing to safety. While that story popped earlier in the week, you now have many, including top U.S. officials saying that the whole thing

Starting point is 00:14:59 might have been a scheme by Israel. And so there's a lot that we've got to break down. So where we'll start is with after the NATO summit in Turkey last month, you had Trump making a weirdly big deal about the fact that he had decided to fly on the old Air Force One plane instead of the 400, million-dollar luxury jet, Qatar gifted the United States. Anyway, Trump claiming that he'd be traveling from Turkey to a military base in England on the older plane for old time's sake. So he boards the older plane in full view of cameras and news organization. You literally have a video of him getting on the jet, which was also occupied by members of the White House Press Corps and top administration officials. But you then

Starting point is 00:15:28 had it being revealed that it was just an elaborate ruse. Right, just minutes after boarding, Trump and some of his aides secretly exited the plane and they were whisked away on a catering shuttle that took them to a military jet. And according to reports, the reason for this is that U.S. officials had determined that there was a credible threat against him and Air Force 1 from Iran. You had multiple outlets reporting that Iranian operatives were plotting to fire a missile at the plane that Trump was on as he left Turkey and that someone had been spotted near the NATO summit with a shoulder-fired missile. But of course, one of the big key things is that basically everyone else still flew on that plane. The journalists and reportedly even some of the White House

Starting point is 00:15:58 staff on the jet had no idea they were being used as decoys in a plot to down Air Force 1. Seemingly, all or most thought that Trump was still on the plane with them. And then when everyone landed in England, Trump was secretly moved back onto Air Force One so that it could be seen disembarking in full view of reporters. You even had the White House posing a picture of Trump leaving the plane saying that he had arrived at the British base on board the former Air Force One. Now notably here, you had some of the journalists on Air Force One seeming a bit sketched out by the fact that the White House staff instructed them to keep window shades closed during the flight when they were still on the ground. But when they asked Trump about it later, he just responded

Starting point is 00:16:29 because you're probably on a dangerous flight because of the sleeves bags that we have to deal with. With him saying he has a threat all the time against his life, claiming that he's number one on Iran's hit list and then adding, but if I go, you go, right? Which one, a darkly funny but also insane thing to say before you even consider that it is extra insane because he tricked this group of people into thinking that he was on the plane with them. This is a group of people he seemingly used as decoys in a potential assassination attempt. And then what makes it even crazier is that we're now seeing reports that some of the highest ranking officials in America were also on the Air Force One flight. We're talking Secretary of State Marco Rubio, Treasury Secretary Scott Besson, top policy advisor, Stephen Miller,

Starting point is 00:17:04 and the White House Communications Director, Stephen Chung, they were all reportedly on Air Force One. And then, as far as who was on the secret jet with Trump, right, the cool kids, let's not get blown up in the Sky Club. The Washington Post saying that list included Defense Secretary Pete Heggseth as well, as at least three aides who were, quote, all among an inner circle of supporters who worked for Trump at his Mar-a-Lago estate in Florida during the four years between his presidencies. Also, a big thing here is, while most of the details here are just for media reports, Trump himself also appeared to confirm that the secret plane swap did in fact happen while speaking to reporters.

Starting point is 00:17:32 And there, you had him claiming that he was just following directions from the Secret Service. Well, it's only up to Secret Service. I just follow what they'd like to do. They wanted me to go in a different flight, a different plane, equal safety, but they wanted me to do it, so I do it. I do what they say. And also with that, he somehow tried to claim that the people in the decoy plane were actually somehow safer. Why was it too dangerous for you to fly on Air Force One, but not too dangerous? I think actually the plane that I flew on was at greater risk. I think it was at greater risk because that would be the plane I think that we, that they would be more likely to go for.

Starting point is 00:18:08 Which is an argument that makes sense if one, you're fucking idiot. Or two, the jet Trump was secretly put on was actually not a secret jet and like on the side they had a big sign that said actually Trump's on this one. And yes, that statement makes sense. But then also with his just completely nonsensical explanation aside, Trump and his administration, they still haven't explained why everyone was still like. allowed to travel on the plane if it was deemed too vulnerable for the president. Nor have they said that additional security precautions, if any, were put in place to ensure the safety of those passengers. But now you also have this whole situation getting even more complicated because the Washington Post just published a new report alleging that the assassination

Starting point is 00:18:41 threat that prompted this whole scheme, it came from Israeli intelligence passed to the CIA. Right, but CIA analysts, quote, did not view the intelligence as compelling and conveyed that skepticism to Trump administration officials. With one official calling the reports of threats against Trump's life, quote, Israeli derived, not U.S. generated, and viewed as low confidence. But despite all that, sources say that the Secret Service still enacted their elaborate plan out of an abundance of caution. Renew of that credibility assessment also appearing to have been backed up by other sources, with the Wall Street Journal reporting that the Israeli intel was vague, and many members

Starting point is 00:19:10 of the president's staff deemed it not credible. Right, adding, Turkish officials also told regional counterparts that they found no evidence Trump was ever in danger of a shoulder-fired missile attack. But, and this is such a key thing, a key takeaway, you have some U.S. intelligence officials reportedly believing that the main reason Israel shared this intelligence was to influence Trump's decision-making in the ongoing Iran war. You even had one official claiming that Marco Rubio was aware of the Israeli threat intelligence and the Trump's switcheroo plane, but still decided to board Air Force One, which seems to me and either he thought that there actually was an incredible threat,

Starting point is 00:19:39 or he's just so fucking tired of everything that he is just ready for death. But then with all this, you then had a ton of people online arguing that this latest reporting, it just shows how much influence Israel has over Trump and how easy it is for them to get him under their thumb. Right, people saying this is yet another example of Israel pull in Trump's strings to ensure that he keeps fighting a war that they want. And there was also something you saw echoed by some political leaders like Senator Chris Van Hollen who said, I am very curious about the extent to which the Israeli provided intelligence was not only credible, but independently verifiable. I have no doubt that Iran would like to see the president gone, but this all seems a little fantastical. As I'm also noting that top Democratic leaders said that they weren't briefed on the alleged assassination threat,

Starting point is 00:20:14 which also makes it seem like it wasn't actually serious because they would have at least informed key lawmakers, right, if not the public as a whole. Especially because when Trump has faced what they say are credible assassination attempts in the past, he and everyone around him, they've made such a big deal about it, and understandably so. So then with this, you have people asking, well, why did they try to seemingly sweep the whole thing under the rug? Was it because they realized they put the lies of all those people on Air Force One at risk? Or was it because they're embarrassed that Israel has such an iron grip on Trump. But that, my friends, you beautiful bastards, is the end of your Thursday show. Of course, yes, it is with that like, but if you haven't already, to keep us in your feed, subscribe.

Starting point is 00:20:45 If you're new here, maybe get really crazy, buy yourself some tickets to see us live at crashing outtour. I'm so excited. But that said, I release you out back into the world. Thank you for watching. I love yo faces and I'll see you right back here next time.

The Philip DeFranco Show - The Honey Scandal Exposed an Even Bigger Problem

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