Phoebe Gates knew Phia shopping app took credit for sales it didn’t drive

Phia co-founders Phoebe Gates and Sophia Kianni pushed for features in the e-commerce startup’s software that took credit for sales it didn’t drive, according to internal communications and people with knowledge of the matter.

The founders were aware of the practice for at least seven months going back to December, according to the people and messages posted on the company’s internal Slack channels that were shared with Bloomberg News. The people asked not to be identified as they were not authorized to discuss the issue.

That timetable runs counter to public remarks by the company, which said on July 8 that it had only become aware of the situation “within the last 24 hours.”

Phia bills itself as a “personal shopping assistant” that helps users find the lowest prices on a broad range of clothes and fashion accessories. It operates a browser extension that, when used as part of the online checkout process, can quickly find discount codes for products and save shoppers money. When a shopper uses Phia’s product to help make a purchase, the company earns a commission from the retailer for helping drive the sale.

But Phia’s browser extension was also designed to report that the startup drove a sale even when its product was never used – a practice that resulted in increased commissions, Bloomberg reported in July. The company said at the time that the problem stemmed from a software bug that had only been discovered on the day it was contacted by Bloomberg.

In reality, Kianni and Gates, the daughter of billionaire Microsoft Corp. co-founder Bill Gates, were aware of features that, without user intent, set a web tracking device known as a cookie into the checkout process for online sales, according to the people and Slack messages. Two people with knowledge of the matter said the exchanges referenced in this story are no longer visible to Phia employees.

The strategy, which is broadly prohibited by Phia’s commercial partners, was implemented at least as far back as December, the internal chats show, and involved purchases made on the websites of several major retailers, including Nike, Gap and Nordstrom. A Bloomberg review of Phia’s historical source code confirmed these features existed.

“Any features causing misattributions were immediately removed over a month ago on July 7,” a Phia spokesperson said. “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 added that the company will continue to connect shoppers to discount offers. “We will learn from this and want to ensure our users have the best possible shopping experience, with........

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