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

Phoebe Gates, the 23-year-old daughter of Microsoft co-founder Bill Gates, is facing allegations of "cookie stuffing" at Phia, the shopping startup she co-founded — an alleged practice that lawyers say can attract a maximum penalty of 20 years in US federal prison, according to reports.

What is cookie stuffing?

Phia, co-founded by Gates with fellow Stanford graduate Sophia Kianni, works as a browser extension that hunts for discount codes across online retailers. When a shopper picks one of its coupon codes at checkout, the software drops a "cookie" — a small tracking file — signalling to the retailer that Phia helped close the sale, earning it a commission. Cookie stuffing is when that file is planted, even though the platform played no role in the purchase.

Ariel Givner, founder and principal attorney at Givner Law, flagged the stakes 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 report found

Phia said in July that it had learned of the problem only "within the last 24 hours" and called it a glitch. Bloomberg now reports that the founders had known for at least seven months.

Citing internal Slack messages and people familiar with the matter, the report said cookies were dropped into the checkout flow even when shoppers had not used Phia. This went back to at least December, spanning retailers including Nike, Gap and Nordstrom. It accounted for the bulk of Phia's revenue, according to the report. After the features were switched off in July, average daily revenue fell from about $80,000 to between $10,000 and $28,000, Bloomberg said. In June, cookie stuffing made up about 51% of the merchandise value Phia claimed credit for.

An internal dashboard seen by Bloomberg showed that what the company called a bug was a toggle named "enable coupon auto drop."

The Slack messages

Gates, who has said she has "such a desire to prove myself" without her parents' help, grew worried that Phia was not earning enough commission from Etsy, the report said. On 18 December, 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 proposed dropping a cookie whenever a user dismissed a Phia pop-up. Told that Google Chrome bars this, 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 told Bloomberg the feature was never implemented.

Phia's response

A Phia spokesperson told The New York Post: “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.”

The spokesperson said July's revenue drop also reflected the disabling of most monetization efforts, and that Bloomberg overstated its data analysis.

Affiliate network Impact.com has suspended Phia and reallocated its commissions, the report said. Phia raised $30 million in 2025 from backers including Hailey Bieber, Kris Jenner and Sara Blakely. Bill Gates is worth $108.4 billion, according to Forbes.