If you’re wondering how a browser extension got so much money to pay all these YouTubers for sponsorship, well, they’re not. They are literally stealing the money they paid the YouTubers right back from them by replacing their affiliate code with their own.
For people looking for replacements, Edge’s integratedauto coupon code works well enough. RetailMeNot does the same job and has also been around for a long time.
Why am I entirely not surprised that LMG knew what the fuck was going on, and didnt say a fuckin thing about it.
Made more public comments over legitimate criticism about his “just trust me, bro” warranty, than about honey being a out and out scam.
They might not be able to say anything. Advertising contract might have a clause saying they can’t speak of the details of their deal, or speak negatively about the sponsor.
Never watched the channel, but I would guess that being tech-themed makes it a worse look that they promoted it for so long before catching the issue, so they were worried it would cast doubt on all other endorsements and tank the value of advertising with them.
I think coming out and pointing out what honey did would probably be the least damaging thing they’ve done in the past few years.
because holy fuck have they had some whoppers.
The “hard R” thing still permanently etched into my brain lol.
Context
Linus misunderstood that the phrase “hard R” referred to the N-word. He thought it was the R-word. He was saying “people used to use hard R all the time, like on Family Guy and stuff. I used to use it too!” His co-host caught the misunderstanding and it was sorted out quickly before he said anything else embarrassing lol.
My favorite was the trust me bro shirt.
You could see Luke having to physically restrain himself for calling his boss a fucking hard R word on live stream.
Always wondered why YTers were complaining about lack of commissions and this explains most of it
It’s not just Honey swapping the affiliate codes. Practically all the major coupon sites do it too. That’s why they require you to click on a coupon code to reveal it. When you click, they usually reveal the coupon code in a new tab, and helpfully redirect the current tab to the store, using their affiliate link.
It’s more obvious when websites do it though, since they can’t auto-close the tab like Honey does. They also don’t automatically pop up at checkout like Honey does.
I imagine some of the other coupon extensions do the exact same thing as Honey though.
I’m glad this information is coming to light because I think that it should be fixed, at least as far as the affiliate link piece goes, but I find myself irritated by the sensationalism of the poster.
They’re really pushing to make this seem as evil as possible, and milking it for every drop it’s worth. Making this a two-part series and not exposing it immediately feels super shitty to me.
Just post the full information you have, if this is really so bad, stop trying to farm clips.
Also, not enough focus on the timeline. Honey’s business model has changed dramatically since it was released long ago, and I feel like the part two video is going to complain about the original Honey business model, which was literally just a coupon code aggregator, just based on the “cliffhanger” at the end
it should be fixed
It’s not a mistake, but an incredibly unethical business model. Why minimize the issue?
not exposing it immediately feels super shitty to me
it doesn’t change anything to the facts though
It’s serialization, as old as printed news. You can dislike that but it’s not like he’s the only one doing it
If you look at their history, they seem to be a younger YouTube channel. I think he’s breaking it up more so that he can actually put out one video a month and not lose subscribers. He seems to be slowly managing to make the videos longer each month.
I suspected it was a smaller channel, but didn’t look myself. I haven’t heard of them up until this point so this story could be a particularly big opportunity for them, so it makes sense why they are choosing the delivery method that they are
The dude spent a year figuring this out, researching and getting all his ducks in a row. What did you do, whats your contribution? Oh, let’s see, you bravely complained in a comments section about the way he chose to release the info, accusing him of the crime of sensationalism for clicks.
Gee, why would he want to get paid for his work?? HOW SELFISH! It’s not like there are companies out there trying to steal content creator revenue, right??
The way you complain more about him than the company, makes me wonder, do you work for Paypal, or that new project, Pie? Just weird to see you trying to make him look bad for wanting to get paid for his work. Sounds like a Honey thing to do.
My guy take it down a notch, damn. I’m not calling for his head on a pike, I have legitimate and valid criticisms. I apologize if the tone came off more critical than I meant it but hot hell you came in spicy.
But, to address your issue:
Why does one wrong make a right? Why does him exposing the issue invalidate any criticisms or expectations of quality or integrity? To me it does not, hence why I criticize. And I even said I was glad the information is coming to light, and I’m grateful for him drawing attention to it, I just wish it could have been done a little more tactfully is all. I would like to have all the information right now, rather than waiting for a “part 2”.
I also just don’t appreciate the stoking of anger, which has clearly worked. Ragebait is toxic and that’s what is being done with this story, from my perspective, so I don’t love it.
I knew Honey was sketchy, but I just assumed it made it’s money from just data harvesting everything
Yeah I always felt something was off with honey. I never downloaded it for that reason, it was just kinda too good to be real or something. Like how are they making enough money to pay all these YouTubers to promote them? Something wasn’t adding up
If you have multiple extensions installed honey always secretly steals the revenue from competitors without asking for consent. Most other extensions will ask if you want to activate cashback. Honey just disables their competitors and steals that affiliate revenue. It should be classified as malware
The thing is I think it’s feasible to do this in a non gross way…it’s essentially a search engine that just looks for promo codes, matches them against brands, and then tries them in rapid succession on the checkout screen. I think they would probably need humans to resolve the many 1-off issues (could work in a crowdsource manner like adblock filters) and a central registry to keep track of which ones fail, but it’s not a hugely complex problem.
how are they making enough money to pay all these YouTubers to promote them? Something wasn’t adding up
- Know average amount of revenue a customer gives you over some period of time
- Figure out what percentage of that you’re willing to lose
- Get a loan
- Use that loan to pay to advertise to get customers you wouldn’t have anyways
- After the period of time (mentioned in step one) passes you’ll have a profit if everything went correctly
It’s not really a mystery.
In the entire time I used Honey, I never once got a valid coupon code for literally anything. Pretty sure they scraped a ton of my browsing data though.
Are you aware that there are other chrome extensions that offer more coupons for a ton of online stores? Dontpayfull Automatic Coupons or Retailmenot always have plenty of coupons available. I don’t understand why everyone is stuck on Honey, which has been of very low quality in recent years.
I need to check this out, sounds pretty interesting to me. I never tried Honey because it seemed way too shady!
For how long, I wonder:
Saw reCAPTCHA on a discount code box the other day - one click per each code tried
Same here. Newer found a single coupon for me. I uninstalled it a few months ago, not because I thought it was sketchy, but because I figured it must be better at finding discounts for things that I don’t shop for online, like shoes and pizzas or something.
I don’t shop for online, like shoes and pizzas
How do you shop for pizza not-online? Bro still going with pizzas brochures? Respect bro. If you top that off ny ordering by landline, it’d be perfect.
But yeah I had similar thoughts on Honey, never installed and now I think I definitely won’t. Thx 4 i Lemmy
Why would you need to order pizza online? Not everyone wants to pay fees for the “convenience” of paying more for the food and having to type in my credit card info myself. You call them up, you get a better price, and you pay when you get there.
Why would you need to ordering pizza, period?
Food ordering apps aren’t convenient as fuck and I dare you to argued against that.
If you live in a bigger city and have trusty restaurant’s with trusty service, yeah, call em. I do for two of my trusty places, but theyre rather far and expensive from where I now live. And the places around here change like everyone year or two. So yeah.
Most people use apps.
Food ordering apps aren’t convenient as fuck
I agree. Nothing convenient about overpaying to entrust your food to underpaid, unvetted delivery workers
God I hate this new phone the screen is just the tiniest bit too small and I keep hitting the left most suggestion instead of the middle one, turning ares into aren’ts and woulds into wouldn’ts.
I’m sure you know what I meant.
Pretending they aren’t massively popular exactly because they make the whole thing easier and more comfortable (browsing menus you know are up to date, being able to specify allergies as much as you want, etc) would be incredibly naive.
Is capitalism using it aa a possibility to exploit even more? Yes. Does that suck balls? Yes. But does is the tech itself shit? No.
Capitalism enshittifies everything. Automation isn’t cursed at because the current economic system mean that the working classes will get less, and that is a bad thing. The technology isn’t. So the tech isn’t the issue. Capitalism is.
I use them only when it’s free (ie someone else is paying for it). I hate them so much. They are not more convenient, they increase the price by 100% and they actively hurt people and small businesses.
browsing menus you know are up to date
A quick web search shows plenty of anecdotes to the contrary.
being able to specify allergies as much as you want
And you trust that?? If I had a serious food allergy I would absolutely NOT trust that a food delivery service would communicate those effectively given how much they push restaurants around, up to and including adding restaurants without their knowledge or consent.
I suppose in the strictest sense, sure, these apps are convenient, but you sure are paying a lot for it, and some restaurants charge extra for it on top of the fees, and the delivery folks aren’t getting a fair cut of the fees. Most of the fees go to big tech.
Rent-seeking middlemen. This is the pinnacle of capitalism. Taking revenue while providing nothing is maximum efficiency. You can tell because it raises prices invisibly for everyone.
This is just a baby version of how credit card companies have placed a 1%-5% sales tax on the global economy. You might say “at least the CC companies provide a service”, but that tax get’s added no matter if your using a CC or not.
How does the tax get added if you don’t use a credit card?
Because enough people use credit cards that businesses have felt compelled to raise prices across the board to compensate.
When you get a credit card machine you sign an agreement saying something like transactions under X amount we, the credit card network company, will charge you 50c or any transactions over X amount we will charge your 1.5%.
Now as a business owner you raise prices 1.5% to cover this fee. If someone pays in cash, the extra 1.5% goes to you, if the customer pays with a card, the 1.5% goes to the card network .
Credit card fees get baked into the general price and are averaged between all the accepted cards. Hence cash transactions and lower-fee cards (debit, credit with less benefits) end up paying more of the share of the higher-fee cards.
It’s well explained in the following video: https://youtu.be/OceYCEexDqQ
The same price must be charged for products purchased with credit card or cash. Otherwise the card provider will withdraw their service from the retailer. So the credit card margin is added to every price.
card provider will withdraw
Dubious, as I regularly see gas stations with separate cash vs card prices. I’ve seen small businesses offer discounts for cash, too. And it’s not like visa is going to stop processing cards because walmart started offering cash prices. It’s just scare tactics. And for big companies, people who pay in cash offer bigger profit margins, so it’s not like they are incentivized to help the situation.
Actually true, but outdated. There was a massive decade long $30b legal fight that eliminated credit card network’s “anti-steering” provisions. Those were contractual terms that retailers signed that prohibited them from offering different prices for cash and card. Some retailers have responded by offering different prices, or otherwise adding a processing fee to card transactions as a result of that settlement.
And the vast majority did nothing.
Obviously it varies from business to business. Some may not want the hassle, some may see consumer sentiment against fees and not feel it’s worth the impact. Some are content to merely leave prices 3% (or more) higher.
Ultimately, very few businesses price things based on their costs…instead they price based on what they think people are willing to pay, or what the market will bear.
It’s also worth considering, at the scales of many of these businesses, accepting and handling cash is very much not a free option. If I’m a supermarket chain, I pay a card company a few percent and maintain my payment terminals and I magically get my income deposited daily directly in my preferred bank account. I’ve got some risk with stolen cards and chargebacks, but the big Chip Card and Mobile Wallet rollouts have dramatically limited my exposure to that liability.
With cash I have a substantial cost to handle, collect, count, and deposit at each location. I have concerns about counting accuracy, interval and external theft, counterfeit currency, purchasing change from my local bank (which typically has a fee assessed for businesses), etc.
In Italy it’s illegal to raise the price if you are using a credit card. The price needs to be the same no matter the payment method
Cause they can’t charge more for CC purchases so they raise the prices for everyone.
If you dont know how a business makes money, chances are its some shady stuff
Providing coupons on stuff for free, with zero ads? Thats pretty weird. Being Bought by PayPal for 4 BILLION dollars?!?!? There has to be some real sketchy shit.
While I agree with you, I think we should be careful about allowing the ignorant to be punished. It’s unreasonable for a non-tech-savvy person to be aware of all the ways a company can screw you. If they’re skeptical of everything, they can’t use anything
You mean a free extension that claims to give me discounts seemingly out of the goodness of their hearts that also has access to every website I go to in the browser where it is installed is not exactly on the level? I’m shocked…well…not that shocked.
I can’t believe that something too good to be true was too good to be true!
I tried it in a Firefox container once, while shopping for Xmas gifts. Not only did it want access to absolutely everything, none of the things I was looking to buy got any meaningful discount from it. Surely that would make one question how and why this thing is even still running, unless you don’t ask many questions.
People add extensions and then forget about them immediately, those are the true whales for these companies
Yeah the one that somehow has the money to get the biggest influencers to advertise them.
So the TL:DW version seems to be that honey changes or adds an affiliate link to get a commission on the sale. Similar programs like Capital One Shopping probably do the same thing.
Honestly, I don’t give a shit. I hate affiliate links no matter who gets them. They are the real scam.
Sounds link the real solution is to use it to identify potential coupon codes. Then clear cookies, resign in, and enter the code yourself. But it’s not like that yields a cheaper price, so I’m not even sure I care.
That’s just one issue, there’s also the fact that they partner with stores to give worse coupons than are actually available, by letting them get affiliate money when doing so. And then advertising that they ALWAYS give you the best codes, while getting paid by stores not to do so…
Theres also another video coming up with stores that have been screwed over by Honey getting hold of codes that are supposed to be hidden/limited. (though that’s honestly on the store, make your limited coupons actually limited to avoid this…) But he only teased this, there might be something wkse/more.
Slightly scummy on the first front, but then again, if I knew the better codes, I’d just use them rather than use a browser extension.
On the second front, that’s more the fault of companies not validating exclusive codes.
Sure but when you advertise we well find you the best price available and you don’t cause the company paid you to give this lower coupon it is fraud.
He mentions in the video that they stopped advertising that when the BBB brought it up with them.
I think for this story, the timeline is paramount. What Honey used to be compared to what it became are worlds apart. Claims they made when they were just a coupon aggregator should be considered in a different light than claims once they started partnering with vendors
I’m torn on affiliate links. I’ve worked with people in sales before and it’s usually scammy unless the contract is done right (flat rate commission, no bonuses for selling “certain” items). I’ve seen really hard working and informative workers that are actually impossible to replace because of the knowledge of products and handling the customers needs without flair or extra cost. Will inform them of cheaper methods like how easy it is to purchase and install a cable versus paying someone $100 just to plug something in and flip a switch basically.
In those instances, I think the affiliate/commission is warranted. Same with some awesome youtube channels I’ve ran across where they test the shit out of several products in a category (Torque Test Channel is a good one). If I need the product and I’m buying it off their recommendation I will gladly use their affiliate link if I think about it beforehand.
Now, there are some channels that I’ve just taken the affiliate link to be basically a form of sponsorship and promotion. Sadly a lot of construction/trade channels end up falling into this eventually. Matt Risinger is probably one of the worse ones, but even lower end guys like The Stud Pack just become a “new product showcase” channel instead of DIY or instructional videos.
Matt Risinger’s channel was pretty good when he first started but the last few I’ve watched seem like nothing but commercials. I haven’t watched his stuff in a while so I gave it a shot on a recent video and remembered why I stopped watching.
I’m starting to think they put something toxic in the Zip System, or at least it’s like a gateway for corporate sponsorship cocaine. Once they start jerking themselves off talking about how great Zip is, it usually goes downhill from there (not bashing zip, just is always funny). I just recently gave up on him so it was interesting to see the decline. There would be a really great informative video, then several just commercialized crap.
The sad part is if any of these products are scammy, we probably won’t find out about it publicly. The company product will just slowly fade from existence, maybe a report done by a safety or efficiency board that will call it out and be dropped from code. There’s been plenty of building products that don’t hold up to their specs when scrutinized.
I work in telecom. Currently I’m working with the group that pre-wires large apartment complexes. When we first started doing this everyone was all about the Zip systems. I’ve noticed in the last 18 months they’re all back to normal OSB and house wrap. And it’s like “Zip- meh”. It was so hyped 6 years aggo. Risinger was one of the firat I swe hyping Zip and like you said its only gotten worse.
not a tldw
Reductive take that doesn’t really summarize
- Change affiliate tokens to their own
- Use clickbait and dark patterns to hide changing the tokens
- Have deals with vendors so they can set the max discount percentage
- Steal unknown discount codes from people entering them (Allegedly. I read it will be revealed in part 2 of that video)
Thank you for saying this. I totally agree with your process, and I’d do the very same every time, but something is wrong in an intangible way that makes me feel bad about doing it.
Is that it? Is the fact that the choice is between two entities I’ll never know or even recognize again, that offends my morals but satisfies my ethics? And, since Honey is doing something for me in giving me this code, should that not make me want to help them in return?
I’m not saying I’ve figured this out so much as saying thanks for enabling me.
I do recommend watching the video, it’s a lot more egregious than you might think.
Say that you’re watching an LTT video, and they say that they have a sponsored affiliate link in the description for a product you want to buy.
By clicking that link, you’re basically saying “Thanks, LTT! I hope you get commission off this sale for me, for bringing it to my attention”. Otherwise, you could just go to the site directly, and bring up the product without any affiliate link backs.
So you’ve click on the link, your browser opens up and takes you to the store page with an LTT affiliate link cookie set.
ANY interaction with the Honey pop-up (even clicking ‘Got It!’ when it says that there are no coupons available) will overwrite the cookie to PayPal (Honey’s parent company).
Additionally, Honey works in conjunction with stores to only show certain permitted coupons, even if end users submit better ones. e.g. it might only show HONEY5 for a 5% discount, while there might be a valid BLACKFRIDAY20 coupon code available that aggregation sites show.
There’s also meant to be a Part 2 to this coming out soon, I believe? So there’s probably even more to this story than we know so far.
From the preview, I’m guessing honey is shaking down retailers. If someone hasn’t partnered with them then they’ll do what’s on the tin, apply the best coupon available. They tell the retailers they’ll stop if they agree to a partnership.
Was it not obvious that the extension was doing that and scraping your browser data?
Scraping data yes Scraping affiliate links? No
Lmao, I never trusted a browser extension.
Like, immediately “Too Good To Be True” red flags were raised.
If I want coupon codes, I could just google “Coupon Codes for [shopping platform]”
Soooo… You don’t have ublock installed then?
Open Souce baby
Not the same
Open Source what? Ad-blocking? Do you mean pi-hole?
Did you read the source or do you know anyone who has? Do you have statistics on vulnerabilities found?
If not, it is the same, you just trust gorhill more than honey without evidence to back it up. So do I. But it’s important to remember this is just a lie most people are telling themselves, not backed up by anything other than faith.
Trusting strangers isnt a good thing, bur trusting that out of the many users out there, someone would’ve found out malware, is much better trusting one entity’s proprietary code.
But practically, you can’t expect everyone to be auditing code. The average person isn’t that knowledged, myself included. But “Use Open Souce Software” is still a very good advice, even to an average person (like myself) who couldn’t possibly verify the code by themselves.
Firefox itself is also based on trust on its developers, but Firefox is still better than Chrome.
We live in a society, there’s no way to conpletely avoid trust.
We have to trust our food souce isn’t poisoned.
The farmers
the people picking up the crops
or if its meat, the butchers
the druck drivers
the people packing and unpacking
the grocery store workers
I mean, we cant possibly have everyone auditing the entire food supply chain.
That’s why we have government to audit it.
Preferrably a transparent government with many workers in the departments, and also overseen by a democratically elected government, who can pass laws to regulate the process, and the citizen to hold the government accountable. That would be very close to open source. A fully open source system would be having CCTV footage of the entire food supply chain publically available. But even then, not everyone is gonna have the time to check all the cameras, but the point is we just trust that someone out there is gonna be watching it.
In contrast, a close source system is essentially one single corporation doing all the audits, with no transparency, and no government/citizen oversight.
You sent a lot of words that seem to be agreeing with my point and I appreciate this.
How do you know Ohio is real? Have you been there yourself? Have you seen it with your own two eyes? Or do you just trust all the people who claim to live there?
You see, believing in the existence of Ohio is exactly the same as believing that my dad works for Nintendo and I got to play their next game early. It was awesome btw.
Yes I’ve been to Ohio. It’s as terrible as people say.
However the correct analogy is this: “I distrust alliant credit union, but I trust a random internet stranger that in theory is doing their work in public”. That’s the right number of employees and the right scale.
Your analogy is basically accepting my point. In this case, I’m trusting a random internet stranger not to lie to me, and you’ve very clearly illustrated why that doesn’t work. Believing Ohio isn’t real would require a large conspiracy. Ublock introducing something naughty would require one man. I trust that one man, but there’s no reason to. If you think that’s absurd do some research about recent software package changes that introduced backdoors.
I trust a random internet stranger that in theory is doing their work in public
There’s no ‘in theory’ about it.
I’ve actually had an extension I was using be revealed as spyware (it was hoverzoom, I immediately switched to an alternative afterward).
I don’t read every line of every piece of software I use because that would be impossible, but I do actually look at some of it and modify it to suit my needs. It was because there are many thousands of people like me that do this that the problem in hoverzoom was caught. It’s been ten years, so I don’t have the best memory of the event, but I think it only took a few days to catch it as well, despite the fact that the offending code was left out of the GitHub repo and was only in the compiled extension.
The state of open source isn’t perfect (not everything has reproducible builds yet) but in general I ‘trust’ that every other programmer in existence isn’t in on a conspiracy to screw me over specifically.
Why would any of this be about you personally? I honestly can’t take you seriously when this is your view of security, and it’s made worse when you extend that to “we caught em once so the system works”.
You don’t have McAffee’s installed then! /s
Do people not immediately google “How does X make money” or is that just me?
It is about Honey hijacking the referrals, which wasn’t known until a youtuber made a video about it (or at least not widely known)
This is why I don’t trust Brave Browser. They did this in the past. Well, I don’t know if they replaced referrals but they added them when they weren’t there.
Yes, they’ve been doing this since even before PayPal bought them. This is how they’ve always made money.
I’m that cynical i just avoid anything being shilled by a YouTuber. I assume if they’re pushing it this hard it must be nefarious in some way and I spend no more time thinking about it.
I will drop my subs for channels that shill this stuff though once it becomes evident it’s shady.
They do, but then a trusted “insider” youtuber or podcaster who they have a years long parasocial relationship with “signs off” on the product and the person says to themselves, “X person has integrity and they are very smart, they wouldn’t put their name on Y unless they did a lot of homework, so I don’t have to.”
And life is difficult, complicated and overwhelming, so you can’t really blame “normal” folks for putting the same faith they’d put into their tech saavy nephew into these personalities. The influencers should pause though and accept that if they can’t enthusiastically describe the reason a thing is actually legitimate, they should refrain from endorsing it or accept part of the blame for misleading people.
Fuck PayPal and its related entities and all executives past, present and future. And I guess fuck you too now, Will Ferrell - you cosigned Mel Gibson in whatever the fuck that daddy movie series was and now you’re the face of these people? The “PayPal mafia” (cringe) literally just bought the US election. I know you need to bankroll a lot of family trips to Sweden, but you h ave too much obviously dirty money now, Will. Hard to chuckle at your comedies now, and that’s a bummer.
You don’t seem like you’re ok.
Cybertruck breakdown?
That’s just the normal resting state of a cybertruck. Saves time to only add an adjective when it’s actually working :)
I didn’t Google it. I just figured, if it found me a 10% discount, the vendor would also send Honey some % of what I paid for the product.
I feel like I’ve searched it up for honey, but the search results said the same thing as the YouTubers shilling it. Didn’t download it anyway because of how many people were advertising it. Anyone who uses that much money to advertise can’t be getting their money in a reasonable manner.
The problem is that a lot of these startups don’t make money. The enshittification comes later, first stage is just burning through VC cash to establish market share.
No need to do even that. If a simple piece of software becomes a company, it’s 99% a scam.
I have, for some businesses I’ve wondered about. For example, I use the virtual cycling platform Zwift, which charges a monthly or annual fee to use. The biggest competitor, Rouvy, also charges a fee. Makes sense, it takes money to develop these things, buy and maintain servers, etc. The income and expenses are obvious. (Zwift does offer bike frames and wheels from real world brands; I assume the brands paid something to be included.)
Enter MyWhoosh. Free to use, so the income side is unclear. From some searching, they claim they’ll generate revenue via ads - but I doubt that would generate enough to support the platform.
The company is based out of Abu Dhabi, so I assume it’s really sportswashing - they’re just dumping a bunch of money into it and not really caring that it isn’t making money (at least for now).
I’m sticking with Zwift (in part because I have it working under Linux and Wine).
I just assumed it was a scam the moment I saw it. Just thought it was farming data for profit out in the open because everyone else dose that. They went above and beyond and made corpo malware.
Did Amazon kill off their smile thing yet? I don’t order enough on there to notice anymore but I always used to use it when I did
I think Amazon smile got axed in early 2023
I don’t know why they would kill off a tax ride off.
I can’t tell if you are serious.
American companies get tax breaks for charity and they all exploit the shit out of it.
True but they don’t make money with this, they still have to spend most of the money.
From your link is a great example:
To illustrate, suppose that the American Cancer Society is hosting a formal dance as a fund-raiser (the ACS is a certified charitable organization). Further suppose that the fair market value of a ticket to the dance is $75, and that the donor pays $375 to purchase a ticket. The donor may claim only a $300 deduction, because the amount contributed ($375) is reduced by the amount of the benefit that he received ($75, the fair market value of the ticket). This holds true even if the donor does not actually attend the dance.
The taxable income of the donor is reduced by $300. If the donor’s income was in the 35% income tax bracket both before and after the deduction, the donor’s tax liability (amount of taxes owed to the government) is reduced by $105.
