Banks are facing a growing number of fraud cases originating from their own customers rather than hackers. In response, the New York-based startup Casap has raised $56 million to support banks in countering this issue. The company closed a re-priced Series B round on Wednesday, led by Base10 Partners.
Strategic investors included Experian and Synchrony, while Emergence Capital and Lightspeed Venture Partners participated in the follow-on round. This new capital brings Casap's total funding to $90 million.
First-party fraud, often called friendly fraud, is straightforward: an individual makes a purchase and then disputes the transaction, claiming they did not make it. While this can sometimes be an accidental error, it is more often not.
The figures demonstrate a rapid rise in the problem. According to a survey by Casap and Cornerstone Advisors, first-party fraud accounted for 36% of all reported fraud cases in 2024, up from 15% the previous year. Investor Primary estimates annual losses at over $100 billion.
Banks express serious concern. Two-thirds of surveyed institutions expect further growth in fraud losses by 2026. Moreover, nearly half of them do not know how many false claims their tools actually detect.
Ron Shevlin from Cornerstone noted a worrying fact: more than a third of Americans claim to have committed first-party fraud or know someone who has.
The dispute resolution process is slow and costly. A single case can take up an employee's time for 45 minutes and stretch over 90 days. Casap aims to change this situation using its AI agents, which manage the dispute from start to finish.
These agents handle application intake, investigation, decision-making, evidence collection, refunds, and customer communication. The agents adhere to each bank's specific rules, and cases requiring human judgment are escalated to a person.
The results, according to Casap, are hard to ignore. Clients report a reduction in first-party fraud losses by 51%. Dispute resolution time is cut from a potential 90 days to just eight days. Furthermore, about 73% of cases are resolved automatically, and human processing time is reduced to one or two minutes. Chargeback rates have also improved: Casap reports a 96% success rate compared to the industry average of around 60%.
Casap was founded by CEO Shanti Shanmugam and co-founder Cissy Peters. Shanmugam previously worked at Robinhood, and Peters worked at Chime. They first met on Facebook and started building Casap in their spare time.
Since then, the company has grown rapidly. About a year ago, Casap raised $25 million in a Series A round. Since then, revenue has grown tenfold, exceeding the initial goal by more than double. Casap now serves over 100 banks, credit unions, fintech companies, and processors.
Experian plans to study consumer intent signals and first-party fraud jointly with Casap. Synchrony is using the technology to support the transition of its customer service. Kelly Shaw of Synchrony Ventures stated that Casap helps resolve disputes faster and stop first-party fraud.
Banks face a difficult choice: tighten dispute controls and annoy honest customers, or be lenient, allowing fraudsters to get paid. Adeemi Ajao, Managing Partner at Base10, believes Casap is breaking this dilemma.
Casap has demonstrated that AI agent technology can change this trade-off. This is why this round is important. Casap is now moving beyond just disputes to cover fraud, collections, claims, and complex exceptions—some of the most expensive tasks in finance.
For clients, this could mean faster refunds in case of a genuine error. For banks, it means lower losses, and for fraudsters, it means the possible end of free opportunities.
