Financial AI Startup Casap Raises $56M to Automate Bank Fraud and Disputes.

Casap, a financial AI startup that helps banks and card companies manage disputes and chargebacks, has raised $56 million in a Series B funding round led by Base10 Partners. The financing, announced on Wednesday, brings the company’s total funding to $90 million since its launch in 2023.

The company declined to disclose its valuation. Synchrony and Experian also joined the round as strategic investors, alongside existing backers that include Lightspeed Venture Partners, Emergence and Primary.

Casap’s product is built around AI trained using a range of large models, with a system tailored specifically to dispute resolution. The company focuses on a costly area for financial institutions: claims from cardholders who challenge transactions, including cases of first-party fraud, where customers dispute purchases they actually made.

Shanthi Shanmugam, Casap’s chief executive and co-founder, said the problem is partly driven by the way some consumers view disputes. “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,” she said.

Consumer protection rules are designed to shield people from third-party credit card fraud, but Casap argues they also make it difficult and expensive for banks and card issuers to reject dishonest claims. “When you look at the rules that govern these disputes, they are written in a way that almost assumes that no one lies,” Shanmugam said.

As a result, some financial institutions choose to accept disputes below a certain value rather than spend time and money investigating them. Shanmugam said that threshold is often around $30, though in some cases it can be much higher. Casap says its tools have helped customers reduce first-party fraud losses by as much as 51% and lift chargeback win rates to 96%, compared with an industry average of 60%.

Shanmugam said the platform can also cut the average time needed to resolve a dispute to eight days, compared with traditional approaches that can take up to 90 days. Human reviewers remain involved, she said, but their work is narrowed down, often taking only one to two minutes to complete a case. The company does not disclose all the signals it uses to assess claims, but Shanmugam said they include the physical location of a credit card and spending patterns.

Casap, whose name is intended to suggest getting a case done “ASAP”, plans to use the new funding to move beyond first-party fraud claims into other back-office functions for banks and card companies, including customer complaints and collections. Shanmugam founded the company with Saisi Peters, a former Chime employee, after working in product roles at Robinhood, Meta and Salesforce.