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Phoebe Gates and Sophia Kianni reportedly knew Phia was ‘cookie stuffing’ for months
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Phoebe Gates and Sophia Kianni, co-founders of the shopping startup Phia, reportedly knew about the company's 'cookie stuffing' practice for months before it became public, according to new reporting from Bloomberg. The practice involves taking credit and commission for affiliate purchases the platform did not help generate, a tactic that is often banned by affiliate marketplaces because it unfairly diverts referral revenue from other marketers. Bloomberg previously reported on the issue in July, when a Phia spokesperson claimed the company only learned of the problem when the outlet reached out. However, leaked Slack messages and sources familiar with the matter now indicate that Gates and Kianni discussed cookie stuffing with executives and engineers as far back as December.
The latest investigation reveals that cookie stuffing accounted for a significant portion of Phia's sales, and the company saw a notable drop in daily revenue after it stopped the practice. Affected retailers include major brands such as Nike and Nordstrom. While a Phia spokesperson had earlier dismissed the practice as a 'bug,' Bloomberg now reports that it was a purposefully built feature that could be switched on and off. The leaked communications allegedly show the founders actively engaging in conversations about the controversial technique.
In response to the new allegations, a Phia spokesperson told Bloomberg that the company rejected some of the claims but would 'learn from this.' TechCrunch received a separate statement from an unnamed Phia spokesperson, who said that any features causing misattributions were removed on July 7, over a month ago. The statement added that the company is reviewing every transaction, issuing reversals to brand partners, and hiring a head of compliance to prevent future issues.
Phia launched last April as a shopping platform intended to work like Google Flights, helping users find the best prices across various retailers. The startup has faced broader scrutiny in recent months. Shortly after Bloomberg's initial investigation, Puck reported that Phia had lost nearly half its full-time employees since the beginning of the year, that some brands were unaware they were listed on the app, and that investors were put off by the company's aggressive affiliate marketing strategy. Phia has also previously faced controversy over secretly collecting sensitive user data, including tracking behavior across the web.
The latest revelations raise serious questions about the founders' transparency and the company's business ethics. As regulators and affiliate networks increasingly crack down on such practices, Phia's ability to rebuild trust with brands, investors, and users will be critical. The company's commitment to issuing reversals and hiring a compliance head may help mitigate the damage, but the long-term impact on its reputation remains uncertain. Moving forward, Phia will need to demonstrate a genuine commitment to ethical practices if it hopes to recover from these repeated scandals.
