Casap raises $56m to help banks tackle surge in cardholder fraud

Credit card fraud is undergoing a major shift, according to Casap CEO and co founder Shanthi Shanmugam. In the past, nearly all scams were carried out by third parties, but today cardholders themselves account for nearly a third of fraudulent transactions. The shift has been driven by AI tools that make it easier for people to dispute charges, and by social media groups that share tips for carrying out fraud in the guise of getting “free stuff.”

“It comes back to people thinking ‘this is a victimless crime, banks have a lot of money and I need money’, so people tell what they think are white lies,” Shanmugam said.

Casap, whose name is meant to convey “get your Case done ASAP,” uses AI trained on various large models with a harness designed specifically for dispute resolution. Consumer protection laws, Shanmugam said, do a good job protecting people from third party credit card fraud but place a high burden on banks when it comes to rejecting dishonest claims from cardholders.

“When you look at the rules that govern these disputes, they are written in a way that almost assumes that no one lies,” she said.

This has led many financial institutions to simply resolve all disputes in a customer’s favour if they are below a threshold, typically around $30, though Shanmugam said in some situations that cut off can be much higher because banks are reluctant to devote time and expense to an investigation.

Casap says its AI tools have changed that calculation. According to the startup, customers have reduced first party fraud losses by as much as 51 percent, and boosted their chargeback win rate to 96 percent compared to the 60 percent industry average. Shanmugam also said the time to resolve a dispute has fallen to eight days on average, compared with traditional methods that can take up to 90 days. She added that a human remains in the review loop, but the task in each case is far more streamlined, often taking only one to two minutes.

The company declined to disclose a valuation. The Series B brings its total funding to $90 million since it launched in 2023. Casap intends to use the new funding to push into adjacent areas of bank and credit card companies’ back offices, including handling customer complaints and collections services. Prior to launching Casap along with Chime veteran Saisi Peters, Shanmugam worked as a product manager at Robinhood, Meta and Salesforce. Other investors include Lightspeed Venture Partners, Emergence and Primary.