Financial AI startup Casap raises $56 million to help banks stop an explosion of customer fraud

Financial AI startup Casap secures $56 million in funding to combat rising customer fraud

Credit card fraud has evolved, with consumers now responsible for nearly a third of fraudulent transactions. This shift is attributed to AI tools that facilitate disputes and social media groups sharing fraud tips masquerading as requests for "free stuff." Shanthi Shanmugam, CEO and co-founder of Casap, explains that people often tell "white lies" believing it to be a "victimless crime" since banks have ample resources.

Founded in 2023, Casap has raised a total of $90 million, with its latest $56 million Series B round led by Base10 Partners. The company's AI suite, designed specifically for dispute resolutions, has gained traction due to consumer protection laws that place a burden on banks and card companies when handling dishonest claims from cardholders.

Shanmugam notes that when dispute rules assume no one lies, many financial institutions simply agree to resolve all disputes in favor of customers below a certain threshold, typically around $30.

Casap's AI tools have helped customers reduce first-party fraud losses by up to 51% and boost chargeback win rates to 96%, compared to an industry average of 60%. The startup claims to resolve disputes in just 8 days on average, significantly faster than traditional methods that can take up to 90 days. While a human review loop exists, Shanmugam emphasizes that the tasks are streamlined and require only 1-2 minutes to resolve.

In addition to first-party fraud claims, Casap intends to expand its services to customer complaints and collections services using the new funding round. Prior to founding Casap alongside Chime co-founder Saisi Peters, Shanmugam held product management roles at Robinhood, Meta, and Salesforce. Casap's investors include Lightspeed Venture Partners, Emergence, and Primary.