The daughter of a tech titan is in hot water. Phoebe Gates, 23, built Phia—an AI shopping assistant with over 9,600 retail partners—alongside Stanford roommate Sophia Kianni. In interviews, she'd spoken about feeling pressure to distinguish herself from her $108.4 billion-worth father. Now the narrative has flipped. According to Bloomberg, her company stands accused of fraudulent affiliate practices carrying serious criminal exposure.
Phia has denied the allegations. The company blames a software bug. But internal communications reportedly tell a different story.
At a Glance
- Phia raised $30 million in 2025 with investors including Hailey Bieber and Kris Jenner
- Reports claim the startup used deceptive tracking methods to claim sales commissions
- Internal messages allegedly show founders discussing the practice months before it went public
- The feature allegedly represented roughly half of the company's claimed revenue in June
- Daily earnings reportedly fell from $80,000 to between $10,000 and $28,000 after the feature was disabled
The Technical Stuff Made Simple
Here's what affiliate marketing is supposed to look like: you shop online, use a coupon from Phia, and a tracking cookie records that Phia sent you. If you buy something, Phia gets a legitimate cut. The retailer gains a customer. You get a discount. Everyone's happy.
Cookie stuffing breaks that logic. Instead of waiting for you to actually use a coupon, the tracking code drops a cookie the moment you see a Phia pop-up—even if you never click anything. Later, if you buy those Nike shoes on your own, Phia's cookie makes it look like they drove the sale. That's fraud dressed up as a feature.
What the Messages Reportedly Show
Bloomberg says internal Slack communications undercut Phia's "bug" explanation. One December exchange shows what appears to be Gates asking developers to confirm the auto-drop was running everywhere coupons existed, "to confirm we are monetizing on all gmv."
On a separate occasion, cofounder Kianni reportedly proposed a method to plant cookies when users tried to dismiss the pop-up. A colleague reportedly pushed back, noting that Chrome blocks affiliate cookies on dismiss actions. Kianni's alleged response: "I guess we could say that the user is trying to open us and roll it back if they complain."
Why This Story Hits Different
Let's be clear: affiliate fraud probably happens at dozens of smaller companies right now. The difference is those companies don't have a famous surname attracting journalists. Gates' wealth amplifies scrutiny, which means we might actually see accountability where it rarely appears.
This also exposes how thin the line can be between "innovative growth hack" and "federal crime." Cookie stuffing carries up to 20 years in prison for wire fraud. That's not a slap on the wrist.
For readers here, this is a nepotism-plus-hypocrisy story with tech-world stakes. Gates publicly fretted about being a "nepo baby" who needed to "prove herself." If the allegations hold up, the answer to that desire was allegedly to inflate commissions through deception rather than build something real.
Our Analysis: Who's Watching This
The FTC has been stepping up enforcement on digital advertising deception. This case is high-profile enough that regulators will feel pressure to respond. Watch for whether formal charges arrive and whether the company's claimed compliance reforms actually happen.
There's also the question of investor liability. Hailey Bieber and Kris Jenner backed this venture. If Phia sold inflated performance metrics to attract their capital, that's a separate legal problem entirely.
What to Watch Next
Phia's representatives claim they self-reported, removed the offending features in July, and are issuing transaction reversals to brand partners. That's the right PR move. Whether it satisfies investigators is another matter. Expect more reporting as regulators decide whether this merits charges—or stays a cautionary tale about startup ambition outrunning ethics.
Key takeaways
- Internal messages, if accurate, destroy the "bug" defense entirely
- Nepotism brought scrutiny that smaller players avoid for similar practices
- The legal exposure is real, not hypothetical
- Watch for FTC action and potential investor lawsuits
Frequently asked questions
What exactly is cookie stuffing?
It's planting tracking cookies without user interaction, letting companies claim commissions on sales they had nothing to do with.
What's the penalty for this kind of fraud?
Wire fraud charges can carry up to 20 years in federal prison.
Did Phia respond to the allegations?
Representatives said the feature was removed in July and called it a bug, though Bloomberg's reporting appears to contradict that framing.
How big was the alleged fraud?
According to reports, roughly 51% of the value Phia claimed in June came from the contested practice before it was disabled.
Is there any regulatory action yet?
No formal charges have been announced, but the case's visibility makes FTC involvement likely.
Inspired by reporting from: boredpanda.com