Phia Founders Reportedly Knew of Cookie Stuffing for Months

Summary

Bloomberg reports leaked Slack messages and sources show Phia co-founders Phoebe Gates and Sophia Kianni knew as early as December that the shopping startup was cookie stuffing, claiming affiliate commissions for purchases it did not generate. The practice, typically prohibited by affiliate marketplace contracts and potentially grounds for lawsuits, accounted for a substantial share of Phia’s sales, and daily revenue fell sharply after it stopped. Nike and Nordstrom were among affected retailers. Although Phia called the issue a bug in early July and initially said Bloomberg’s inquiry first alerted it, Bloomberg now says the capability was deliberately built, could be switched on and off, and was discussed by Gates, Kianni, executives and engineers.

Phia told TechCrunch that it removed features causing misattributions on July 7, is reviewing every transaction, has begun reversing affected transactions for brand partners and is hiring a head of compliance. The company disputed some claims but said it would learn from the incident. Phia launched last April as a Google Flights-like shopping service for comparing retailer prices. Days after Bloomberg’s July investigation, Puck reported that Phia had lost almost half its full-time employees since the year began, several brands did not know they appeared in the app, and investors disliked its aggressive affiliate marketing. Phia had also faced criticism for secretly collecting sensitive data, tracking users across the web and sending behavior data to its servers.