Phoebe Gates’ young shopping startup, Phia, is facing scrutiny after a report accused the company of improperly taking credit for online purchases it may not have helped generate. Phia, co-founded by Gates, 23, and Sophia Kianni, 24, operates as a browser extension and app designed to help shoppers compare prices and find discounts on clothing and accessories. The controversy centers on a practice known as “cookie stuffing,” in which affiliate-tracking cookies can allegedly be placed during a shopping session even when a customer did not meaningfully use the service. Phia initially said it had only recently become aware of the problem, but a Bloomberg report published August 11 claimed the founders had known about the issue for months. The report also alleged that internal discussions showed company leaders were involved in decisions surrounding the disputed features. Phia has not admitted to intentionally committing fraud and says the features responsible for incorrect attribution have been removed.

According to Bloomberg, internal Slack messages suggested that roughly 51 percent of the merchandise value Phia claimed credit for in June may have been connected to the disputed tracking method. The report also said daily revenue fell from about $80,000 to as little as $10,000 after several monetization features were disabled in early July. Phia disputed the idea that one feature alone caused that decline, explaining that multiple revenue-generating tools had been switched off at the same time. The company said it removed features causing misattributions on July 7, began reviewing transactions and issuing reversals to affected retail partners, and planned to hire a head of compliance. But the biggest question quickly became whether the disputed tracking practices could create consequences far beyond lost commissions.

Cookie stuffing has appeared in previous federal fraud cases, although any criminal liability would depend on the specific facts, evidence, intent and charges involved in a particular case. Corporate attorney Ariel Givner explained publicly that the practice generally involves placing affiliate cookies so a business can claim commissions on sales it did not actually generate, and she noted that federal wire-fraud prosecutions can carry severe penalties in some circumstances. That does not mean Gates, Kianni or Phia have been convicted, charged or sentenced based on the allegations described in the report. For a growing company, however, questions involving an attorney, regulatory compliance, insurance coverage, investment agreements and possible court disputes can become financially significant very quickly. They can also affect ordinary business matters such as financing, a mortgage application, investor confidence or long-term estate planning for founders with substantial personal assets. Previous cookie-stuffing prosecutions cited in the original report resulted in prison sentences, fines or restitution, but those cases involved their own separate facts and should not be treated as predictions of what will happen with Phia.

Gates is the youngest child of Microsoft co-founder Bill Gates and Melinda French Gates and has increasingly built a public identity around entrepreneurship. She and Kianni founded Phia in 2023 after attending Stanford University, and the pair later launched The Burnouts podcast. Gates has previously spoken openly about feeling pressure to prove that her achievements were not simply the result of her family name and considerable privilege. Kianni is also known for founding Climate Cardinals, a nonprofit focused on making climate information accessible in more languages. The current controversy now places their fast-growing company under a different kind of spotlight, one focused less on famous connections and more on how its technology generated revenue. Phia says it is correcting affected transactions and strengthening compliance procedures, while the allegations reported by Bloomberg remain allegations rather than a finding of wrongdoing by a court.