diff --git a/app/scripts/metamask-controller.js b/app/scripts/metamask-controller.js
index b3783283474b..cc9e91e9e889 100644
--- a/app/scripts/metamask-controller.js
+++ b/app/scripts/metamask-controller.js
@@ -865,8 +865,6 @@ export default class MetamaskController extends EventEmitter {
       stalelistRefreshInterval: process.env.IN_TEST ? 30 * SECOND : undefined,
     });
 
-    this.phishingController.maybeUpdateState();
-
     ///: BEGIN:ONLY_INCLUDE_IF(blockaid)
     this.ppomController = new PPOMController({
       messenger: this.controllerMessenger.getRestricted({
@@ -2339,7 +2337,13 @@ export default class MetamaskController extends EventEmitter {
   }
 
   postOnboardingInitialization() {
+    const { usePhishDetect } = this.preferencesController.store.getState();
+
     this.networkController.lookupNetwork();
+
+    if (usePhishDetect) {
+      this.phishingController.maybeUpdateState();
+    }
   }
 
   triggerNetworkrequests() {
diff --git a/test/e2e/tests/privacy/basic-functionality.spec.js b/test/e2e/tests/privacy/basic-functionality.spec.js
index b0f9b54e9928..aef2f16728de 100644
--- a/test/e2e/tests/privacy/basic-functionality.spec.js
+++ b/test/e2e/tests/privacy/basic-functionality.spec.js
@@ -7,10 +7,17 @@ const {
   tinyDelayMs,
   defaultGanacheOptions,
 } = require('../../helpers');
+const { METAMASK_STALELIST_URL } = require('../phishing-controller/helpers');
 const FixtureBuilder = require('../../fixture-builder');
 
 async function mockApis(mockServer) {
   return [
+    await mockServer.forGet(METAMASK_STALELIST_URL).thenCallback(() => {
+      return {
+        statusCode: 200,
+        body: [{ fakedata: true }],
+      };
+    }),
     await mockServer
       .forGet('https://token.api.cx.metamask.io/tokens/1')
       .thenCallback(() => {
diff --git a/ui/pages/onboarding-flow/privacy-settings/privacy-settings.js b/ui/pages/onboarding-flow/privacy-settings/privacy-settings.js
index 30cc64553fcc..60bd84965013 100644
--- a/ui/pages/onboarding-flow/privacy-settings/privacy-settings.js
+++ b/ui/pages/onboarding-flow/privacy-settings/privacy-settings.js
@@ -104,7 +104,6 @@ export default function PrivacySettings() {
   const defaultState = useSelector((state) => state.metamask);
   const {
     incomingTransactionsPreferences,
-    usePhishDetect,
     use4ByteResolution,
     useTokenDetection,
     useCurrencyRateCheck,
@@ -116,8 +115,7 @@ export default function PrivacySettings() {
   const petnamesEnabled = useSelector(getPetnamesEnabled);
   const participateInMetaMetrics = useSelector(selectParticipateInMetaMetrics);
 
-  const [usePhishingDetection, setUsePhishingDetection] =
-    useState(usePhishDetect);
+  const [usePhishingDetection, setUsePhishingDetection] = useState(null);
   const [turnOn4ByteResolution, setTurnOn4ByteResolution] =
     useState(use4ByteResolution);
   const [turnOnTokenDetection, setTurnOnTokenDetection] =
@@ -146,13 +144,18 @@ export default function PrivacySettings() {
     getExternalServicesOnboardingToggleState,
   );
 
+  const phishingToggleState =
+    usePhishingDetection === null
+      ? externalServicesOnboardingToggleState
+      : usePhishingDetection;
+
   const profileSyncingProps = useProfileSyncingProps(
     externalServicesOnboardingToggleState,
   );
 
   const handleSubmit = () => {
     dispatch(toggleExternalServices(externalServicesOnboardingToggleState));
-    dispatch(setUsePhishDetect(usePhishingDetection));
+    dispatch(setUsePhishDetect(phishingToggleState));
     dispatch(setUse4ByteResolution(turnOn4ByteResolution));
     dispatch(setUseTokenDetection(turnOnTokenDetection));
     dispatch(
@@ -320,7 +323,7 @@ export default function PrivacySettings() {
           )}
 
           <Setting
-            value={usePhishingDetection}
+            value={phishingToggleState}
             setValue={setUsePhishingDetection}
             title={t('usePhishingDetection')}
             description={t('onboardingUsePhishingDetectionDescription', [