What is cookie stuffing? The 20-year jail term charge now shadowing Bill Gates’ daughter’s startup

What is Cookie Stuffing? The 20-Year Jail Term Charge Facing Bill Gates’ Daughter’s Startup

Theindiapostdaily.com – Phoebe Gates, the 23-year-old daughter of Microsoft co-founder Bill Gates, is now at the center of a legal controversy involving what is cookie stuffing. The allegations against Phia, the shopping startup she co-founded, suggest an alleged practice that could carry a maximum penalty of 20 years in US federal prison, according to legal experts and recent reports.

Understanding the Cookie Stuffing Controversy

What is cookie stuffing, exactly? Phia operates as a browser extension that searches for discount codes across online retailers. When shoppers select a coupon code at checkout, the software places a “cookie” — a small tracking file — that signals to the retailer that Phia helped complete the sale, earning a commission. However, cookie stuffing occurs when that tracking file is planted even when the platform had no actual role in the purchase.

Ariel Givner, founder and principal attorney at Givner Law, highlighted the severity of the situation in a post on X on Tuesday. “It’s typically treated as federal wire fraud in US courts. There’s a possibility of a max penalty of up to 20 years prison + fines/restitution,” Givner wrote.

What the Investigation Revealed

Phia initially stated in July that it had learned of the problem only “within the last 24 hours” and characterized it as a glitch. However, Bloomberg now reports that the founders had been aware for at least seven months.

Citing internal Slack messages and sources familiar with the matter, the investigation revealed that cookies were being dropped into the checkout flow even when shoppers had not actively used Phia. This practice extended back to at least December and involved major retailers including Nike, Gap, and Nordstrom. According to the report, this accounted for the bulk of Phia’s revenue. After the features were disabled in July, average daily revenue declined from approximately $80,000 to between $10,000 and $28,000.

In June alone, cookie stuffing represented about 51% of the merchandise value Phia claimed credit for. An internal dashboard viewed by Bloomberg showed that what the company labeled a bug was actually a toggle called “enable coupon auto drop.”

Internal Communications and Response

Gates, who has expressed her desire to “prove myself” without relying on her parents’ reputation, became concerned that Phia was not earning sufficient commission from Etsy, according to the report. On December 18, she wrote in a Slack channel: “worried this is an issue across the board…can u confirm auto pop for cookie drop is live on ALL sites w a coupon to confirm we are monetizing on all gmv [sic],” Bloomberg reported.

Kianni separately suggested dropping a cookie whenever a user dismissed a Phia pop-up. When informed that Google Chrome prevents this action, she conceded but added: “I guess we could say that the user is trying to open us and roll it back if they complain,” according to the report. Phia later told Bloomberg the feature was never actually implemented.

“Any features causing misattributions were immediately removed over a month ago on July 7. We are reviewing every transaction, we are fully committed to and have already begun issuing all transaction reversals to brand partners as a result of any misattribution, and we are hiring a head of compliance to make sure something like this never happens again.” — Phia spokesperson

Phia’s spokesperson told The New York Post that July’s revenue decline also reflected the disabling of most monetization efforts, and that Bloomberg may have overstated its data analysis. Affiliate network Impact.com has suspended Phia and reallocated its commissions. The startup raised $30 million in 2025 from investors including Hailey Bieber, Kris Jenner, and Sara Blakely. Bill Gates is valued at $108.4 billion according to Forbes.

Frequently Asked Questions

What is cookie stuffing and why is it problematic?

Cookie stuffing is a practice where a tracking cookie is placed on a user’s browser without their knowledge or consent, allowing a company to claim credit for sales it didn’t actually facilitate. This can result in fraudulent commission claims and is often treated as federal wire fraud in US courts.

What is the potential penalty for cookie stuffing?

Legal experts indicate that cookie stuffing can carry a maximum penalty of 20 years in federal prison, along with fines and restitution payments, when classified as federal wire fraud.

How did Phia respond to the allegations?

Phia removed the problematic features on July 7, began issuing transaction reversals to brand partners, and is hiring a head of compliance to prevent future occurrences. The company also stated it is reviewing every affected transaction.

Who are the investors in Phia?

Phia raised $30 million in 2025 from notable backers including Hailey Bieber, Kris Jenner, and Sara Blakely, among others.