Many in the marketing and tech world have dismissed the Phia scandal as just another affiliate fraud story.
But it’s not.
This is not a story about the distribution of affiliate payouts. Phia may have taken more than $10 million from merchants, as reported by Bloomberg. The scale and audacity of the alleged misconduct are far greater than many people currently appreciate.
The allegations draw comparisons to Honey, which was accused of taking credit for referrals that had already been earned by another publisher.
But that misses the more important story.
Phia, if the allegations are true, did not simply take credit for an existing affiliate referral—it created an affiliate commission that should not have existed. So any shopping session in which the extension is active could become an affiliate transaction, even when no affiliate was ever present.
That distinction matters.
According to testing conducted by Capital One Shopping and Edelman, Phia’s iOS Safari extension allegedly opens background tabs and fires affiliate tracking links without an explicit user action when consumers visit participating merchants’ websites.
These forced clicks are not merely a technical violation of affiliate-network rules, they can lead to legal penalties, and they can cut into an advertisers’ bottom line.
Nearly two decades ago, Edelman uncovered similar conduct by eBay affiliates Shawn Hogan and Brian Dunning, who caused affiliate tracking to be invoked without users clicking. Edelman reported his findings to eBay, which referred the matter to the FBI. Both men were subsequently charged with wire fraud, pleaded guilty and served prison sentences.
Dunning’s indictment alleged more than $5.3 million in compensation, while Hogan’s alleged more than $15.5 million.
Phia has not been criminally charged, and the facts of the cases are not identical, but the precedent demonstrates how seriously forced-click schemes can be treated when they are used to collect unearned commissions.
TBPN estimated the revenue allegedly taken at $12 million, and while I haven’t been able to independently verify that, my conversations with industry insiders who have access to enormous amounts of data indicate a similar figure.
That difference changes who is harmed
With Honey, merchants still paid a single affiliate commission on a completed sale, while those commissions shifted among publishers within the affiliate ecosystem. Publishers objected, but advertisers viewed it as a redistribution problem rather than an increase in cost.
The allegations against Phia are different. As Edelman put it: “merchants are the victims of forced clicks.”
