When PayPal announced last month that it would acquire Honey, the browser extension and app that helps you find coupon codes and deals when you shop online, my ears perked up. It wasn’t the news of the acquisition that piqued my interest: it was the fact that PayPal would pay $4 billion, mostly in cash, for the company. What could PayPal possibly want with Honey’s 17 million users?
But the answer is obvious: data. The reality of every program you use that finds you deals, discounts, coupons, or cash-back rebates is that the service needs to collect information about your shopping habits in order to find those deals and discounts for you.
But is it worth trading your personal data about your shopping habits for a coupon code? Unfortunately, it’s not easy to give a definitive answer across the board. It depends on the service, what data they collect, and how they share it—and by share, I mean sell.
How online shopping browser extensions make money
Shopping extensions and apps have two primary methods of making revenue so they can provide their services to you for free. They probably do both of the following:
First, they charge stores a commission for participating. If cash-back program Rakuten is giving you 5% back when you shop at a particular online store, for example, you can be sure that store is giving Rakuten a commission of more than 5%. You’re just getting a slice of the larger rate. Stores participate because they want to attract new and returning customers. It can take months or even years for a brand to turn you into a loyal customer who keeps coming back. But once you’re hooked, you’re likely to return to that brand, even when there isn’t a sale.
Second, they use your shopping data to help retailers understand your shopping habits. Honey, for instance, has a history of transparency about how it does this. Honey says it doesn’t sell your personal information and only collects data from your shopping activity to inform its primary purpose: to find coupons for Honey users. But it also explains that it does share information about user activity “in an aggregate or anonymized format that does not identify any specific person.”
Maybe that’s in a dataset about how people buy toothpaste online, for a report requested by participating dental health companies. Maybe that’s a trend report about how a certain age demographic shops online. These are hypotheticals, but they give you an idea of how these apps can take your personal habits, drop them in a bucket with everyone else’s, and provide analysis of shopping trends and habits that can inform the larger industry (for a price).
“Modern internet is not designed with your privacy in mind,” said Max Eddy, a software analyst and security expert for PCMag. “Every site, every app, every service is looking at something, and you don’t always know what or why.” You may not mind that a website or app knows that you bought a pair of shoes, Eddy said, but if you knew what other information was being collected, like your name address, or favorite color, you might start to feel your privacy has been infringed.
Why it’s hard to know which apps to trust
Each browser extension and app plays by its own rules, which can make it difficult to determine what information you’re exchanging for the pleasure of a discount. Tristan Rayner writes for Android Authority that in general, apps collect more of your data than browser extensions do, and some of them keep alarmingly broad definitions of who qualifies as a “partner” that gets a peek at your data and what services or advertising they can provide to you. Rayner points out cash-back app Ibotta as one particularly offensive option.
Cash-back shopping portals and their accompanying apps tend to be more invasive, but that’s because they’re giving you a greater reward. Coupon extensions don’t take much of your data, but they can be hit or miss, noted Kevin Brasler, executive editor of Consumers’ Checkbook, a nonprofit consumer advocacy group. Cash-back apps are more reliable in getting you that coveted rebate, but are often more opaque about how your data is used.
“Your privacy doesn’t exist anymore, as far as I can tell,” said Brasler said. “If there’s something you want to buy and you don’t want anyone to know about it, don’t buy through any cash back portal. In fact, walk into a brick and mortar store and use cash.”
How to use shopping browser extensions wisely
Maybe you’re OK with an app seeing the contents of your latest grocery receipt. Maybe it’s worth it to trade some of your information for a discount. What is privacy in 2019, anyway? If you’ve given up on having secrets, that’s fine. But don’t get lazy about it, because it could cost you your data and your money.
“All of these different [services] are basically spending traps,” Brasler said. “They’re designed to get you to spend more. Retailers wouldn’t be paying out commissions unless they’ve found that it helps them somehow.”
So before you assume the store with the highest cash-back offer has the best prices, do some extra research on the product you’re planning to buy. See a coupon for a brand-name item? The store brand may still be cheaper, even after that discount. Browser extensions and apps that find you deals and discounts can be helpful, but you should still strive to avoid getting complacent if you’re shopping on a budget.