Phia Founders Reportedly Knew About Affiliate ‘Cookie Stuffing’ for Months

Phia, the shopping startup co-founded by Phoebe Gates and Sophia Kianni, is facing renewed scrutiny after a report alleged that its founders knew for months about functionality that improperly claimed affiliate commissions on purchases the company did not generate.

Bloomberg reported that internal Slack messages and people familiar with the matter indicate Gates and Kianni were aware as early as December of practices described as “cookie stuffing.” The new reporting conflicts with an earlier statement from Phia that the company became aware of the issue only after Bloomberg contacted it.

Phia founders reportedly knew about cookie stuffing

Cookie stuffing can occur when an affiliate places tracking information that allows it to receive credit for a purchase even when it did not actually refer the customer. Affiliate programs commonly prohibit the practice because commissions can be diverted from another marketer that generated the referral.

Bloomberg’s latest investigation alleges that the disputed functionality accounted for a significant portion of Phia’s sales and that daily revenue declined substantially after the company stopped using it. Retailers affected reportedly included Nike and Nordstrom.

Phia previously characterised the issue as a bug. Bloomberg now reports that internal records indicate the functionality was deliberately built and could be switched on and off.

The report also cites Slack messages in which Gates and Kianni allegedly discussed the practice with other executives and engineers.

Phia says it is reviewing affected transactions.

Phia disputed some elements of Bloomberg’s reporting while acknowledging that it would learn from the incident. The company said features responsible for incorrect affiliate attribution had already been removed.

“Any features causing misattributions were immediately removed over a month ago on July 7,” a Phia spokesperson said.

The company said it is reviewing every transaction and has begun issuing reversals to brand partners for transactions affected by misattribution. Phia also said it plans to hire a head of compliance to prevent similar problems.

Shopping startup faces broader scrutiny.

Phia launched in April with a shopping service designed to help consumers compare prices across retailers, positioning its experience as similar to Google Flights but for shopping.

The affiliate allegations are not the only scrutiny the startup has faced. Puck reported in July that Phia had lost nearly half of its full-time employees since the beginning of the year and that some brands were unaware they appeared on the service.

The startup has also faced questions about its data practices, including allegations that it collected information about users’ activity across the web and transmitted that information to its servers.

The latest Bloomberg reporting adds to those concerns by raising questions about when Phia’s leadership became aware of the disputed affiliate functionality. Phia maintains that the problematic features have been removed and says it is taking steps to address affected transactions and strengthen compliance.