Hustler Words – The shopping startup Phia, co-founded by high-profile figures Phoebe Gates and Sophia Kianni, is once again embroiled in a significant controversy, with new reports suggesting its leadership was aware of the contentious "cookie stuffing" practice for months before it became public. This latest development casts a shadow over the company’s integrity and its founders’ claims of ignorance regarding the alleged unethical business tactics.
Earlier this year, an investigation by Bloomberg brought to light Phia’s practice of "cookie stuffing," where the platform allegedly claimed credit and commission for affiliate purchases it did not genuinely facilitate. This method, widely considered unfair and often prohibited by contractual agreements in the affiliate marketing ecosystem, diverts referral revenue from legitimate marketers. At the time, a Phia spokesperson asserted the company was only alerted to the issue when contacted by Bloomberg.
However, subsequent reporting from Bloomberg, citing leaked Slack messages and anonymous sources close to the matter, paints a starkly different picture. These new findings indicate that Gates and Kianni were reportedly privy to Phia’s engagement in cookie stuffing as early as December. What Phia initially described as a "bug" in early July is now being characterized as a "purposefully built feature" that could be activated or deactivated at will, with the leaked communications reportedly showing the founders discussing these practices with other executives and engineers.
The financial implications of this practice were substantial for Phia. According to the new reports, cookie stuffing constituted a considerable portion of the startup’s sales, and its cessation led to a noticeable decline in daily revenue. Major retailers, including Nike and Nordstrom, were among those reportedly affected by Phia’s attribution methods.
In response to the fresh allegations, a Phia spokesperson informed Bloomberg that while they rebuffed some claims, the company was committed to "learn from this." A statement provided to Hustler Words further elaborated on Phia’s damage control efforts: "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." The company reiterated its commitment to learning from the incident.
Phia, which launched in April of the previous year, aimed to revolutionize online shopping by offering a "Google Flights-like" experience, helping users discover optimal prices across a diverse range of retailers.
This isn’t Phia’s first brush with controversy. Following Bloomberg’s initial investigation in July, a report from Puck revealed that the startup had lost nearly half its full-time workforce since the beginning of the year. Additionally, several brands were reportedly unaware of their listings on the app, and investors expressed discomfort with Phia’s aggressive approach to affiliate marketing. The company has also faced scrutiny in the past for allegedly collecting extensive sensitive user data, including tracking web behavior and transmitting it to its servers without explicit user knowledge. The cumulative weight of these allegations raises serious questions about Phia’s operational ethics and transparency within the competitive tech startup landscape.
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