New reporting alleges Phoebe Gates and Sophia Kianni knew their shopping startup Phia was claiming credit for sales it didn’t generate months before publicly calling it a bug, raising fresh questions about the company’s growth practices.
The scandal surrounding Phia, the AI shopping startup co-founded by Phoebe Gates and Sophia Kianni, has taken a sharper turn. New reporting alleges the company’s leadership knew for months about a feature capable of improperly claiming affiliate commissions — well before the startup publicly described the issue as an unintentional bug.
What Cookie Stuffing Actually Means
At the heart of the controversy is a practice called cookie stuffing, sometimes referred to as cookie dropping. It’s a deceptive affiliate marketing tactic where a company automatically inserts its own tracking code during a user’s checkout process, even without the user genuinely clicking through an affiliate link. The effect is that the company claims credit — and collects commission — for sales it played no real role in generating, effectively siphoning revenue away from other legitimate affiliate marketers and platforms.
How the Story First Broke
Bloomberg first reported on Phia’s alleged cookie stuffing practices earlier this summer, following independent testing conducted by Bloomberg, Capital One Shopping, and affiliate marketing researcher Ben Edelman. That testing found that Phia’s browser extension was generating affiliate clicks on retail websites with minimal or no meaningful user interaction, allegedly opening background browser tabs during checkout to insert its own referral code — in some cases, reportedly overriding legitimate affiliate credit that should have gone to other publishers.
At the time, a Phia spokesperson told Bloomberg the company only became aware of the issue after being contacted by the publication, characterizing it as a bug that was fixed promptly. The fallout was immediate: Phia was suspended from Impact.com, a major affiliate and influencer marketing platform, and the story drew comparisons to a similar cookie-stuffing scandal involving PayPal-owned Honey, which remains the subject of an ongoing class action lawsuit.
The New Allegations
According to follow-up Bloomberg reporting, internal Slack messages and sources familiar with the matter suggest Gates and Kianni were aware of the cookie-stuffing feature for far longer than the company initially indicated — reportedly for at least seven months, dating back to December, well before Phia’s public statements described it as a recently discovered issue.
One particularly notable detail: roughly 40 days before Phia announced a $35 million Series A funding round while touting elevenfold revenue growth, Phoebe Gates reportedly asked employees internally to confirm that the startup’s system was automatically dropping affiliate cookies across retailer websites, writing that the feature should “capture every transaction” if functioning correctly.
Bloomberg also reports that what the company had previously described as a bug was, according to an internal dashboard, actually a deliberately built feature that could be toggled on and off remotely. Independent researcher Ben Edelman reportedly identified this functionality within Phia’s own code, labeled internally as a feature flag.
Additional Concerning Details
The newer reporting also includes an account involving Kianni: after a colleague reportedly flagged that dropping cookies on certain dismiss events could violate Google’s Chrome extension policies, Kianni allegedly floated the idea of telling users their charges would be reversed if they complained, framing it as though users had simply been “trying to open the extension.” A Phia spokesperson has stated that this particular idea was never actually implemented or launched.
According to sources cited in the reporting, the internal Slack conversations discussing these practices are no longer visible to current Phia employees.
Phia’s Response
Regarding the newest allegations, a Phia spokesperson pushed back on some of Bloomberg’s claims but acknowledged the company would “learn from this.” In a separate statement provided to TechCrunch, a Phia spokesperson said, “Any features causing misattributions were immediately removed over a month ago on July 7,” adding that the company is reviewing every affected transaction and has already begun issuing refunds where appropriate.
As of this week, Phia has not released a detailed public statement specifically addressing the claim that its leadership knew about the practice for months prior to public disclosure, and neither Gates nor Kianni has personally commented on the newest allegations through their public channels.
Why This Matters for Phia
Founded in 2025, Phia markets itself as a free browser tool that compares prices across more than 220,000 retail sites and automatically applies discount codes, promising users they’ll “never overpay.” The company has raised more than $40 million in funding at a reported $185 million valuation, backed by a high-profile roster of investors that includes celebrities like Khloé Kardashian and Hailey Bieber.
For a company whose entire business model depends on user trust — both from consumers relying on its price comparisons and from the retail and affiliate partners it works with — allegations that leadership knowingly allowed a deceptive revenue-generating practice to continue for months represent a significant reputational risk, regardless of how the specific legal questions eventually shake out.
What Happens Next
While no formal lawsuits or regulatory actions had been publicly filed against Phia, Gates, or Kianni as of the most recent reporting, legal experts have noted that potential exposure could include claims like breach of contract, tortious interference, or violations of unfair competition law, given that affiliate platforms typically require companies to sign agreements explicitly banning cookie stuffing. Industry observers are now watching to see whether Phia will take steps commonly used by startups facing similar accusations, such as commissioning an independent audit of its extension code or pausing affiliate partnerships while it works to rebuild trust.
Frequently Asked Questions
Q: What is Phia? Phia is a free AI-powered shopping browser extension co-founded by Phoebe Gates and Sophia Kianni that compares prices across more than 220,000 retail websites and automatically applies discount codes for users.
Q: What is cookie stuffing? Cookie stuffing is a deceptive affiliate marketing tactic where a company automatically inserts tracking codes during checkout without genuine user interaction, allowing it to claim commission credit for sales it didn’t actually help generate.
Q: Did Phia originally claim the cookie stuffing was intentional? No. Phia initially described the issue as an unintentional bug that was discovered after Bloomberg contacted the company. New reporting alleges it was actually a deliberately built, toggleable feature that leadership knew about for months.
Q: Has Phia faced any legal or regulatory consequences? As of the latest reporting, no formal lawsuits or regulatory actions have been publicly filed against Phia, Gates, or Kianni specifically related to these allegations, though the company was suspended from the affiliate platform Impact.com following the initial Bloomberg investigation.
Q: Who are Phia’s investors? Phia has raised more than $40 million at a reported $185 million valuation, with a backer list that includes celebrities such as Khloé Kardashian and Hailey Bieber.
