When the internet is rife with influence and inspiration, who gets credit when someone is compelled to buy something online? As the affiliate industry grows, particularly for fashion brands and beauty brands which increasingly route a growing share of sales through such links, the answer is getting harder to parse.
A July Bloomberg investigation into Phia, an AI-powered shopping assistant founded by Phoebe Gates and Sophia Kianni, highlighted a growing transparency problem in affiliate marketing. Phia, which has raised more than $40 million from VC firms such as Kleiner Perkins and celebrity angels including Kris Jenner and Hailey Bieber, helps shoppers find the lowest prices and discount codes across retailers and takes a commission upon sale. According to Bloomberg, even if a user purchased an item via another affiliate network, Phia would open a background tab and overwrite that affiliate’s tracking code with its own. The end result was that Phia would take credit for and receive commission on a purchase it didn’t earn, a deceptive practice known as cookie-stuffing. A follow-up report stated that the founders knew of this since at least December 2025.
“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,” a Phia spokesperson told Vogue Business in a statement on August 31. “We are now continuing to connect our users with items and offers from thousands of brand partners. We will learn from this and want to ensure our users have the best possible shopping experience, with features like our new digital closet and more to come.”
Industry figures say Phia’s alleged practices point to wider systemic issues in affiliate marketing that leave brands, creators and merchants exposed, thanks to a lack of oversight and understanding. “There’s no one checking whether the rules are enforced,” says Ben Edelman, an independent researcher and consultant who independently reviewed Phia’s code and corroborated Bloomberg’s findings.
What’s happening behind the scenes
Affiliate marketing, essentially a form of revenue sharing, was popularized by Amazon in the late 1990s when it launched its Associates program. Back then, it was very simple. When someone clicked an affiliate link, Amazon dropped a cookie, a small file stored in the shopper’s browser that recorded which affiliate had referred them. If they bought anything, the creator, or associate, would earn a commission on that sale.
Today, however, shoppers are likely to zigzag through a smorgasbord of affiliate networks, creators sharing discount codes, and merchants before making a purchase. Shoppers can also inadvertently break the cookie trail by switching devices or using a cookie-blocking browser. Shoppers are also increasingly using AI agents to find new products, meaning a purchase can now happen with no click, and therefore no cookie at all.
This has made determining which party gets the commission a lot more complicated, says Farhad Divecha, CEO of digital marketing agency AccuraCast. “Every channel and every network will want to draw attribution towards itself,” he says. “And that’s a big challenge for all advertisers and marketers.”
It’s also a huge, and increasingly crowded, market. According to digital marketing research firm Emarketer, US advertisers will spend $13.81 billion on affiliate marketing in 2026, up 11.3% from $12.42 billion in 2025. Affiliate marketing is also expected to generate over $240 billion in US e-commerce sales this year, according to the same report.
The space comprises both established networks such as Awin, Impact and Rakuten Advertising and a newer wave of creator-commerce platforms including ShopMy and its competitor LTK. These companies have moved affiliate links out of blog posts and into creator-led storefronts, driving fresh growth to the market.
As it has grown, disputes over commissions have become more common, Divecha and Edelman both say. Along with the investigation into Phia, in an ongoing proposed class action lawsuit, creators allege that the PayPal-owned shopping browser extension Honey “surreptitiously redirected for itself Affiliate Commissions rightfully owed to Plaintiffs” through what they characterise as “cookie stuffing”.
The accusations, which first emerged when YouTuber MegaLag alleged that Honey was “stealing money from influencers” in 2024, have been denied by PayPal, which says it follows “industry rules and practices”, specifically citing last-click attribution. This is a standard, widely used method across merchants, where the commission goes to whichever link a shopper clicked before buying, regardless of earlier referrals. PayPal has also sought to have the case dismissed, first in August 2025, which led the creators to file an amended complaint this January with additional allegations intended to address the court’s concerns. In June, a California federal judge denied PayPal’s motion to dismiss the amended complaint, allowing the case to proceed. The ruling is not a finding of liability and the allegations remain unproven. Vogue Business has contacted PayPal for comment.
After an earlier version of the case was dismissed in November 2025, the creators filed an amended complaint with additional allegations intended to address the court’s concerns. In June 2026, a California federal judge denied PayPal’s motion to dismiss the amended complaint, allowing the case to proceed. The ruling is not a finding of liability and the allegations remain unproven. Vogue Business has contacted PayPal for comment.
The increasingly complicated landscape has not only created more competition for commission, but also made it harder for merchants and creators to track what’s actually going on when a sale is made.
Chlöe Gibbions, founder of Ours Agency, says brands and creators put a lot of trust into the platforms they use for affiliate links for different reasons. Creators, for instance, trust that a referral will be tracked and paid while brands trust platforms to correctly identify which affiliate actually deserves a commission for a sale.
Gibbions says there’s little information available about how conversions are actually assigned. Brands need a better understanding of their own conversion paths, as well as at which stage a creator’s link resulted in a sale, so that compensation can be dealt out fairly.
“Nine times out of 10, consumers don’t buy directly through a link; purchases are often considered over time,” she says. “With this in mind, there is a high chance organic search or paid ads might be attributed with the sale if it’s based on last click rather than assisted conversions.”
What brands can do
Edelman says merchants running two or more affiliate programs risk paying twice for one sale.
That’s because each network tracks the affiliates that sent the final click before purchase separately, and neither has visibility into clicks routed through a separate network. If a shopper clicks links originating from both programs before buying and the merchant reports the same purchase to each, both networks will claim they delivered the sale and the merchant may end up paying two commissions on a single transaction.
Edelman believes most of these merchants may not be aware there’s a problem at all, and pay both obliviously. His recommendation is for brands to partner with only one affiliate platform, to eliminate risk, though this could also limit reach.
Divecha recommends brands apply UTM parameters (short text codes applied to the ends of URLs that identify where a visitor came from) across all activity, invest in offline conversion tracking for in-store sales, and issue individual coupon codes to remove ambiguity for both sides.
Paul Archer, CEO and co-founder of brand advocacy platform Duel, says brands running multiple channels should stay on top of how creators are interacting with their own affiliate systems, as it could expose issues with their current setup. For instance, if a creator posted about a brand’s product that was seen by millions, but was only compensated a minimal amount, Archer argues there could be something inherently wrong with your tracking infrastructure.
Divecha also adds that while retreating to a single channel might solve the attribution problem, it could also constrain growth.
“It is simpler, but depends on whether you want to actually grow your business or shoot yourself in the foot,” he says. “If you did just one thing in today’s multi-channel world, you are definitely setting yourself up for failure.”
Edelman says there needs to be increased scrutiny on affiliate networks and that compliance teams need to be structured to identify bad behavior. Even when networks do act, he suggests they usually do because a practice costs them money directly, such as diverting commission away to a rival network, rather than out of any broader will to police the industry. “There aren’t that many disputes because usually nobody figures it out,” he says.