Casap Raises $56 Million to Combat Customer Fraud in Banks

Credit card fraud is changing its nature: whereas previously almost all schemes were carried out by third parties, now about a third of fraudulent transactions are committed by the cardholders themselves. This shift is linked to AI tools that simplify disputing charges and social media groups where people share tips on how to deceive banks under the guise of getting 'free stuff'.

"It all comes down to people thinking: this is a victimless crime, banks have a lot of money, and I need money, so people say what they consider to be a white lie," said Shanti Shanmugam, CEO and co-founder of Casap.

On Wednesday, Casap announced a $56 million Series B round led by Base10 Partners. The total funding since its launch in 2023 has reached $90 million. The company did not disclose its valuation. Major financial companies Synchrony and Experian joined the round as strategic investors. Other investors include Lightspeed Venture Partners, Emergence, and Primary.

Casap's AI is trained on various large models but with a framework specifically designed for dispute resolution. The demand is explained by consumer protection laws: they protect well against third-party fraud but create a burden on banks when they reject dishonest claims. "The rules regulate disputes as if almost assuming no one is lying," says Shanmugam.

Because of this, many banks agree to resolve all disputes in favor of the client if the amount is below a threshold. Usually, this is around $30, but sometimes the threshold is higher because banks do not want to spend time and money on investigations.

Casap claims its AI changes the equation. According to the company, clients have reduced losses from cardholder fraud by 51%, and the win rate on chargebacks has increased to 96% compared to the industry average of 60%. The dispute resolution time has been reduced to an average of 8 days from 90. A human remains in the process, but their task often takes 1–2 minutes. Casap does not disclose the full set of indicators but mentions card location and spending patterns.

The name Casap stands for 'get your Case done ASAP'. The company will direct funds to adjacent areas of banks' internal departments, including complaints and collection services. Before the launch, Shanmugam worked as a product manager at Robinhood, Meta, and Salesforce, and co-founder Saicy Peters at Chime.