“Cookie stuffing” unfortunately has nothing to do with sugary treats and Thanksgiving dishes. Instead, it’s led to Phoebe Gates—the daughter of Bill Gates and Melinda Gates—getting into some trouble. Specifically, the cofounder of Phia, an AI shopping startup, is catching heat for the company allegedly engaging in just that, according to a recent Bloomberg story.
What is cookie stuffing?
It is a type of affiliate marketing fraud and involves the use of unauthorized “cookies,” or small data files stored in an individual’s web browser. Phia acts as a sort of shopping assistant, and when users install the Phia extension on a browser such as Chrome or Safari, it could help them find coupons or discount codes prior to checking out online.
Phia generates revenue by earning a commission from the retailer for helping complete the sale. The issue is that the browser extension would effectively claim credit for the sale, even if the sale wasn’t completed or the shopper didn’t take a specific required action that would otherwise allow it to claim credit. So, Phia was generating revenue by using the tactic, potentially without facilitating a sale.
Cookie stuffing results in lost revenue for retailers and can lead to criminal charges and penalties. In some cases, it’s been prosecuted as wire fraud.As Bloomberg reports, the 23-year-old Gates, along with Phia cofounder Sophia Kianni, is facing allegations that not only did the company engage in cookie stuffing, but that it knowingly did so for many months and utilized a few different strategies. This practice directly impacted brands including Nike and Nordstrom.
Notably, cookie stuffing isn’t necessarily new. In 2014, for example, Shawn Hogan, the former CEO of a San Diego software company, was sentenced to five months in prison and a $25,000 fine for participating in a cookie-stuffing scheme against eBay. While affiliate marketing programs are ubiquitous, most don’t allow the practice.
