Phoebe Gates might not actually face up to 20 years in prison over potential charges related to a “cookie stuffing” issue linked to her AI-powered shopping startup, Fyre. However, experts say she could be looking at civil lawsuits and fines if the allegations turn out to be valid.
Starr Kashman, a founding partner at a cyber law firm, noted that federal wire fraud carries a penalty of up to 20 years, along with possible financial fines. But she pointed out that prosecutors need to establish that Gates was knowingly involved in the scheme.
“It can’t just be an accidental or careless mistake,” she explained.
According to Kashman, wire fraud requires demonstrating a knowledgeable scheme to defraud affiliated companies out of their money.
More immediate issues for Gates and Fyre might involve financial repercussions, as Cushman indicated.
“The likely outcome here is a financial penalty,” she remarked.
If anyone can prove they lost money due to Fyre’s alleged misconduct, they might pursue civil lawsuits concerning contracts, fees, and even privacy and consumer protection matters, Kashman stated.
Gates, who is 23 and the daughter of Microsoft co-founder Bill Gates, co-founded Phia with fellow Stanford alum Sofia Chianni. They launched an AI-driven shopping app and browser extension in April 2025.
Recent reports from Bloomberg suggest that Phia’s browser extension might have improperly placed affiliate tracking cookies, even if users didn’t complete the necessary actions for the startup to claim credit for a sale—a practice known as “cookie stuffing.” This situation reportedly impacted companies such as Nike, Nordstrom, and Gap, though these companies have yet to comment publicly.
Internal communications at Slack indicate that the company’s founders were aware of the automatic cookie placement feature months before Fyre made the issue public.
Mr. Fear, associated with the startup, disputes some of Bloomberg’s findings and hasn’t been charged with any crime.
“Even if there’s intent, it doesn’t guarantee prosecution,” Kashman said, adding it was “very unlikely” for a young entrepreneur with a clean background to receive a severe sentence for a first-time offense.
There’s also the potential of facing lawsuits. “If these allegations hold water, there’s a good chance she or her company could end up in court,” Kashman suggested.
The controversy revolves around the affiliate marketing model that powers Phia’s business. When people purchase something through an affiliate link or coupon, a tracking cookie identifies the affiliate as responsible for the sale, entitling them to a commission.
However, “cookie stuffing” can manipulate this system, placing cookies that allow affiliates to get credit for sales they didn’t actually facilitate.
Ben Edelman, a researcher in advertising who has examined Fyre’s actions, mentioned a term he prefers— “forced click”—that refers to behavior involving client-side software like browser extensions. He noted, though, that the difference from cookie stuffing might be quite subtle.
“There’s no legitimate reason for an extension to trigger an affiliate link or place an affiliate cookie if the user hasn’t meaningfully interacted with it,” he said via email, adding that the ulterior motive is clearly financial gain.
Edelman argued that forced clicks are a fundamental violation of network rules and can rapidly boost affiliate revenue, while also driving up costs for merchants.
Legal expert Richard Newman pointed out that cookie stuffing is generally forbidden in affiliate agreements. He mentioned that it could undermine commissions owed.
Gates could face significant legal challenges if wrongdoing is proven, but Newman added these types of disputes usually remain contractual issues between private parties.
Affiliates who violate these terms would likely forfeit their fees, according to Newman.
Bloomberg has reported that, after the controversial feature was turned off, Fyre’s daily revenue drastically fell from approximately $80,000 to between $10,000 and $28,000. However, Fyre claims this decline was also due to their choice to halt most of their monetization efforts.
The Post has attempted to reach out to Gates and Fear for their comments.
