Cookie stuffing unfortunately has nothing to do with sugary treats and Thanksgiving dishes. Instead, it’s led to Phoebe Gates—the daughter of Bill and Melinda Gates—being in some trouble. Specifically, Gates, who is the co-founder of Phia, an AI shopping startup, is catching heat for “cookie stuffing.”
That’s according to a recent Bloomberg story that found Phia was cookie stuffing—a type of affiliate marketing fraud.
What is cookie stuffing?
Cooking stuffing involves the use of fraudulent “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 when shopping 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.
This results in lost revenue for retailers, and for those engaged in it, could result in criminal charges and penalties. In some cases, it’s been considered a form of wire fraud, too.
As Bloomberg reports, the 23-year-old Gates, along with Phia co-founder Sophia Kianni, are facing allegations that not only does their company engage in the practice, but that they knowingly participated in it for many months, and utilized a few different strategies to do it. It has affected companies such as Nike and Nordstrom, too.
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.