Phoebe Gates' shopping app Phia is in damage control mode and offering refunds after a payment scandal

Phoebe Gates and Sophia Kianni cofounded the shopping app Phia. Kimberly White/Getty Images for TechCrunch Clean up on aisle Phia.The shopping startup cofounded by Bill Gates' 23-year-old daughter, Phoebe, is doing damage control after a bombshell Bloomberg report revealed it had been earning commissions on sales it didn't help drive.Phia is working with at least one affiliate network, Impact.com, to refund affected parties and correct attributions, an email viewed by Business Insider shows.A Phia spokesperson confirmed that the company has offered transaction reversals to brands.Phia's basic premise is that it can help shoppers find discounts on clothes and other items. The startup makes money by taking a cut of the sales it drives to brands, processed through affiliate networks that act as intermediaries by tracking commissions and facilitating payments. Phia publicly acknowledged this month that its browser extension had also been claiming credit for sales it had no part in, an issue it blamed on a software update and said that its team had resolved.That revelation sent a shock wave through the e-commerce world, as brands and agencies scrambled to determine whether they had been affected and potentially lost money.Impact.com said in an email to an affiliate agency on Wednesday that, as a result of its review, it was "working with Phia to determine solutions for you, and our publishers & creators that may have had an inequitable result due to Phia's products and services." "We're reprocessing all actions credited to Phia between June 20 and July 29 that had not yet been paid out," Impact.com said in a statement to Business Insider. "These actions are being reattributed to the appropriate publisher, or refunded to the advertisers, depending on each situation. The June 20 to July 29 window represents the period when Phia's activity was under review but the associated commissions hadn't yet been disbursed."Impact.com didn't address what would happen with payments made to Phia before June 20. Ben Edelman, an independent researcher who studied Phia's code and helped surface the problem, told Business Insider he'd observed the attribution issue occurring for months.Phia has been temporarily suspended from Impact.com's marketplace and will need to show a period of compliance before it can be reinstated.Rakuten Advertising, another major affiliate network, told Business Insider it is actively investigating the situation.The network CJ Affiliate told publishers and partners last week that it was providing "reconciliation payments" to correct tracking mistakes, according to an email viewed by Business Insider. The email did not name Phia, and CJ Affiliate did not respond to requests for comment.Correct attribution is a core issue in affiliate marketing, and this incident is a major blow to high-flying Phia, which launched its app in 2025 and has raised $43.5 million from investors ranging from VC heavyweights like Kleiner Perkins and Khosla Ventures to celebrities including Hailey Bieber."It could greatly damage their trust and reputation in the industry," Jordan Williams, the CEO of attribution fraud prevention company Veeper, told Business Insider. He added that he's received an influx of outreach from brands and agencies since Phia's attribution problems became public.Gates and her cofounder, Sophia Kianni, who use their social platforms to promote Phia — and have a popular podcast called "The Burnouts" — have not publicly addressed the issue.Cristin Culver, a tech startup communications consultant, said that was a strategic misstep."They have these avenues in which they are very out there, and very vocal and very willing to speak," she told Business Insider. "But then, when it comes to the core of their business and whether or not people can trust them, they're not speaking."Do you have a story to share or a tip about Phia? Contact these reporters at mberg@businessinsider.com or sbradley@businessinsider.com, or on Signal @MadelineBerg.44 or @sydneykbradley.123. Read next Madeline Berg is a correspondent at Business Insider, where she covers the wealthy, famous, and powerful. Her stories include analyses of some of the most well known billionaires, from Mark Zuckerberg to MrBeast, investigations into celebrity brands, and deep dives into figures like Jeffrey Epstein and Leon Black.Her article on erosion in Nantucket won a National Association of Real Estate Editors award, and her story about Diddy's world falling apart was a finalist for an LA Press Club Award.Previously, she was at Forbes. Her work included cover stories on Tyler Perry and Shonda Rhimes, investigations into Kylie Jenner's beauty brand, and deep dives into Britney Spears' fortune. Madeline has also written for The New York Times, The New York Observer, and Racked. She regularly appears on panels, on television, and in documentaries discussing the entertainment industry and general business news.Contact her via email at mberg@insider.com or by phone, Signal, or WhatsApp at 914-420-4721. https://www.businessinsider.com/secure-news-tips. Sydney Bradley has been covering media and tech for Business Insider since 2020. She breaks news and writes extensively about Instagram and Facebook, as well as new platforms and startups shaping social media, dating apps, the creator economy, venture capital, and tech culture.Sydney's reporting on Instagram was nominated as a finalist for the 2021 Los Angeles Press Club National Entertainment Journalism Awards.She graduated from the University of Virginia with a degree in American Studies. You can follow Sydney's work on LinkedIn, Twitter, and Instagram at @sydneykbradley.Have a tip? You can also contact her via encrypted messaging app Signal (@sydneykbradley.123), encrypted email (sydneykbradley@proton.me), or standard email (sbradley@businessinsider.com). Use a personal email address, a nonwork WiFi network, and a nonwork device; here’s our guide to sharing information securely.Selected stories:Young founders are going viral modeDeath isn't the end: Meta patented an AI that lets you keep posting from beyond the graveDating apps are betting millions that AI will convince you to fall back in love with themHitting the social media jackpot is harder than ever — and it's changing the creator economyBig Tech's AI obsession is rattling creatorsNew startups race to bring back the 'old internet' vibes of the 2000sThe mysterious demise of a $1 billion social shopping appThe loneliness epidemic has given rise to a new crop of startups aiming to help people connect in real lifeIt's not just you — no one is posting on social media anymoreHow Instagram's unpredictable changes are giving influencers whiplashWhy YouTube subscriber counts have become an unreliable 'vanity metric' in the era of short videoInside the week that changed Facebook forever Shopping E-Commerce Exclusive More