Phoebe Gates and Sophia Kianni Allegedly Aware of Phia’s ‘Cookie Stuffing’ Scheme for Months

Phia, the retail startup co-founded by Phoebe Gates and Sophia Kianni, is facing scrutiny over its business practices once more. The latest controversy arose following a report earlier this year that revealed the startup had engaged in cookie stuffing, a tactic where credit and commission are taken for affiliate purchases that the company did not facilitate.

This contentious method raises legal concerns for startups, as it diverts referral income from other affiliate marketers. Typically, companies like Phia commit to not engaging in cookie stuffing when they enter into contracts with affiliates because of its unfair nature.

When the initial report surfaced, a representative from Phia claimed that the company only learned about the cookie stuffing issue after being contacted by reporters.

However, further investigation indicates that both Gates and Kianni were aware of the cookie stuffing as early as December, based on leaked communications and insights from sources familiar with the situation.

Recent findings suggest that cookie stuffing constituted a significant portion of Phia’s business, with a notable decline in daily revenue after the practice was halted. The latest revelations also identified impacted retailers like Nike and Nordstrom.

In early July, a spokesperson had referred to the cookie stuffing as a technical glitch, but current reports assert that it was a deliberate feature that could easily be toggled. Additional leaked messages revealed discussions around cookie stuffing among Gates, Kianni, and other members of their team.

In response to the new allegations, a representative for Phia stated that while some claims were disputed, the company acknowledged the need to “learn from this experience.”

In a statement to TechCrunch, a spokesperson emphasized that the features responsible for misattributions were removed a month prior, on July 7. They disclosed that they are reviewing all transactions and are in the process of issuing reversals to partners affected by the misattribution, as well as hiring a compliance officer to prevent future issues.

Phia mentioned their intention to gain insights from this incident.

Launched last April, Phia aimed to serve as an efficient shopping platform akin to Google Flights, helping users discover the best prices from various retailers.

Following the investigation in July, another outlet reported that Phia has seen nearly half of its full-time workforce depart since the start of the year and that several brands were unaware of their presence on the platform. Moreover, concerns were raised about how aggressively Phia was engaging in affiliate marketing. Previous controversies also surfaced regarding the company’s practice of collecting sensitive data, borrowing from user behavior tracking across the internet.

Updated with a statement from Phia.