Phoebe Gates’ shopping startup Phia is defending its response to a cookie stuffing scandal after new reporting revealed the founders were aware of the deceptive affiliate marketing practice for at least seven months, according to Bloomberg’s investigation published in August 2026.
Cookie stuffing is a form of affiliate fraud where companies place unauthorized tracking cookies on users’ browsers to claim credit for sales they didn’t help generate. In Phia’s case, the browser extension would falsely claim commissions on purchases completed by shoppers even when the extension didn’t facilitate the sale or when the shopper took no required action to earn the affiliate credit.
According to Bloomberg, Phia co-founders Phoebe Gates and Sophia Kianni pushed for features in the startup’s software that took credit for sales it didn’t drive, with internal Slack messages showing the founders were aware of the practice going back to December 2025. The reporting indicated that the practice affected major retailers including Nike and Nordstrom, and that cookie stuffing made up a significant portion of Phia’s revenue.
When Bloomberg first reported on the cookie stuffing allegations in July 2026, a Phia spokesperson initially characterized the issue as a software bug. However, the August reporting revealed that the feature was purposefully built and could be switched on and off, contradicting the company’s earlier public explanation.
In response to the new allegations, Phia stated that it removed all features causing misattribution on July 7, 2026. The impact was immediate: according to reporting in the New York Post, average daily revenue at the company plummeted from around $80,000 to between $10,000 and $28,000 after the features were disabled. In a statement to TechCrunch, a Phia spokesperson said the company is “reviewing every transaction” and has “already begun issuing all transaction reversals to brand partners as a result of any misattribution.”
The startup also announced it is hiring a head of compliance to prevent similar issues in the future. Phia said it would “learn from this incident.” The company has not been charged with a crime, and as of mid-August 2026, no formal lawsuits or regulatory filings had been publicly initiated against the startup or its founders, according to reporting from Startup Hub.
Phia, which launched in April 2025, raised $35 million in venture funding in January 2026 and markets itself as an AI-powered shopping assistant. The scandal represents the latest controversy for the startup, which has also faced scrutiny over data collection practices in the past. Legal experts have noted that cookie stuffing can potentially fall under federal wire fraud statutes, which carry penalties of up to 20 years in prison, though no charges have been brought against Gates, Kianni, or Phia as of August 2026.
Sources
- TechCrunch — Reported that Phoebe Gates and Sophia Kianni knew about cookie stuffing for months, with details on Phia’s response and statement
- Bloomberg — Investigated internal Slack messages showing founders’ awareness of cookie stuffing dating back to December 2025
- Fast Company — Explained what cookie stuffing is and its impact on retailers like Nike and Nordstrom
- New York Post — Reported the revenue drop from $80,000 to $10,000-$28,000 daily after feature removal
- Startup Hub — Confirmed no formal lawsuits or regulatory filings had been publicly initiated as of mid-August 2026
