Phia Co-Founders Aware of Cookie Stuffing Practices for Months

New Delhi, India Aug 12, 2026 ALN: Phia, the shopping startup co-founded by Phoebe Gates and Sophia Kianni, is once again under fire for its alleged business practices. The latest issue stems from earlier this year when Bloomberg published an investigation that mapped out how Phia was taking credit and commission for affiliate purchases it did not help to generate, known as cookie stuffing.

It’s a controversial practice that can get startups sued, mainly because it’s seen as taking referral revenue away from other affiliate marketers. Usually, when affiliate platforms like Phia sign on to work in a marketplace, they sign a contract stating that cookie stuffing is banned because it’s unfair.

Cookie stuffing is a practice where an affiliate marketer uses deceptive methods to place tracking cookies on a user's browser without their consent or knowledge. This allows the marketer to claim commission for sales they did not originate. The implications of cookie stuffing extend beyond ethical concerns; they can lead to legal repercussions for companies found engaging in such practices. Affiliate marketing relies heavily on trust and transparency, and cookie stuffing undermines these principles, potentially damaging relationships with retailers and other partners.

When Bloomberg reported on Phia’s cookie stuffing, a Phia spokesperson told the publication that the company was only made aware of the issue when Bloomberg reached out to them. This claim suggested a lack of oversight or awareness within the company regarding its operational practices, raising questions about the internal controls and governance at Phia.

However, new reporting by Bloomberg shows that Gates and Kianni knew their startup was cookie stuffing as far back as December, based on leaked Slack messages and sources familiar with the matter speaking to the publication. This revelation indicates a possible disregard for ethical business practices and raises concerns about the leadership's integrity. The leaked messages reportedly detail discussions among Gates, Kianni, and other executives about the cookie stuffing practices, which contradicts the earlier statements made by the company.

The latest reporting found that cookie stuffing made up a good chunk of Phia’s sales, indicating that the company may have relied on these unethical practices to drive revenue. The financial implications of this practice are significant; once Phia ceased cookie stuffing, it reportedly experienced a sizable drop in daily revenue. Such a decline illustrates the precarious nature of business models built on unethical practices, where short-term gains can lead to long-term sustainability issues.

The outlet also gained insight into the affected retailers, including major brands like Nike and Nordstrom. These companies often have strict guidelines regarding affiliate marketing to protect their brand reputation and revenue. The involvement of high-profile retailers raises the stakes for Phia, as legal actions or damage to relationships with these brands could have lasting repercussions on its business model.

Back in early July, a Phia spokesperson referred to the cookie stuffing as a bug, but Bloomberg now reports that this was a purposefully built feature that could be switched on and off. This distinction is crucial; if cookie stuffing was indeed a designed feature rather than an unintentional error, it suggests a premeditated approach to exploit affiliate marketing systems. Such a revelation could lead to increased scrutiny from regulators and industry watchdogs, who may view this as a flagrant violation of fair business practices.

Regarding the new allegations, a Phia spokesperson told Bloomberg that it rebuffed some of the publication’s claims, but said the company would “learn from this.” This statement reflects an attempt to mitigate damage control and re-establish trust with stakeholders, although it may not fully address the concerns raised by the allegations.

When reached by Bloomberg, an unnamed spokesperson for Phia said in a statement: “Any features causing misattributions were immediately removed over a month ago on July 7. We are reviewing every transaction; we are fully committed to and have already begun issuing all transaction reversals to brand partners as a result of any misattribution, and we are hiring a head of compliance to make sure something like this never happens again.” This commitment to rectify past mistakes is a necessary step for the company, but it remains to be seen whether these measures will be sufficient to restore trust among its partners and customers.

The company added that it would “learn” from this incident, suggesting an acknowledgment of the need for improved oversight and ethical standards moving forward. However, the effectiveness of such measures will depend on the implementation of comprehensive compliance protocols and a cultural shift within the organization.

Phia launched last April with the promise to be a more effective Google Flights-like site for shopping — helping users find the best prices across various retailers. The initial appeal of Phia was its innovative approach to shopping, leveraging technology to streamline the purchasing process. However, the recent controversies have overshadowed its initial promise, leading to questions about the viability of its business model.

A few days after Bloomberg’s investigation in July, Puck also dug around and found that Phia lost almost half its full-time employees since the beginning of the year; that several brands were unaware that they were listed on the app; and that investors got the ick from how aggressively Phia was leaning into affiliate marketing. The significant turnover in staff indicates possible internal turmoil, which could further impact the company's ability to recover from this scandal. Additionally, the revelation that brands were unaware of their listings on the app raises serious concerns about Phia's operational transparency and communication practices.

It has also faced controversy in the past, like about how it was secretly collecting swaths of sensitive data, including tracking user behavior across the web and sending it back to their servers. This previous incident of data collection without user consent has compounded the negative perception of Phia, as it raises broader questions about privacy and ethical data usage in the tech industry. The combination of cookie stuffing and data privacy issues paints a troubling picture of a startup that may be prioritizing growth over ethical considerations.

Updated with a statement from Phia.