Phia, a shopping startup co-founded by Phoebe Gates and Sophia Kianni, is facing allegations of questionable business practices.
The latest issue stems from an investigation published by the outlet earlier this year, which revealed that Phia was engaging in “cookie stuffing,” a practice where a company takes credit and commission for affiliate purchases it did not help generate. This practice can lead to startups being sued, as it is seen as unfair and takes referral revenue away from other affiliate marketers.
Typically, when affiliate platforms like Phia sign on to work in a marketplace, they agree to a contract that bans cookie stuffing. The affected retailers included Nike and Nordstrom.
When the outlet initially reported on Phia’s cookie stuffing, a Phia spokesperson claimed that the company was only made aware of the issue when the outlet reached out to them.
However, new reporting by the outlet suggests that Gates and Kianni knew about the practice as far back as December, based on leaked Slack messages and sources familiar with the matter. They knew about the issue before it was reported.
Related: Bezos eyes purchase of sports team
The latest reporting found that cookie stuffing accounted for a significant portion of Phia’s sales, and the company saw a substantial drop in daily revenue once it stopped the practice.
A Phia spokesperson told the outlet that the company rebuffed some of the publication’s claims but acknowledged that it would “learn from this.” In a statement to another publication, an unnamed Phia spokesperson said that any features causing misattributions were removed on July 7, and the company is reviewing every transaction and issuing reversals to brand partners as a result of any misattribution.
Phia also announced that it is hiring a head of compliance to prevent similar incidents in the future. The company launched last April with the promise to be a more effective Google Flights-like site for shopping, helping users find the best prices across various retailers.
In the past, Phia has faced controversy over secretly collecting swaths of sensitive data, including tracking user behavior across the web and sending it back to their servers.
The company has also faced issues with investors and brands, who have been concerned about its aggressive affiliate marketing tactics. Phia’s reputation has taken a hit, and it remains to be seen how it will recover from these allegations.
Related: Data Modernization Fails When No One Understands It
As Phia moves forward, it will be important for the company to prioritize transparency and compliance to regain the trust of its users and partners.
The incident serves as a reminder of the importance of ethical business practices in the tech industry. Companies must take responsibility for their actions and make amends to prevent similar incidents in the future.
It is essential for companies to prioritize compliance and transparency, especially in the affiliate marketing space. Phia’s case highlights this need.
Phia must demonstrate a commitment to ethical business practices to rebuild its reputation.
When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence. Dominic-Madori Davis is a senior venture capital and startup reporter at TechCrunch. She is based in New York City. You can contact or verify outreach from Dominic by emailing [email protected] or via encrypted message at +1 646 831-7565 on Signal.
