Justt emerges from stealth with $70M to fight chargeback fraud with AI

The Machine Making sense of AI
Justt, a company developing an AI-powered platform to fight fraudulent chargebacks, today emerged from stealth with $70 million raised across three funding rounds, including a series B led by Oak HC/FT and two previously unannounced rounds led by Zeev Ventures and F2 Venture Capital, respectively. CEO Ofir Tahor says that the proceeds will be used to expand Justt’s sales and marketing operations in the U.S. and Europe and to triple the size of the company’s Israel-based R&D team.
False chargebacks, also known as “friendly fraud,” occur when shoppers wrongly dispute credit or debit card charges — costing online sellers an estimated over $125 billion in lost revenue. As transactions move online, this type of fraud has become more common. Ecommerce merchants stand to lose roughly $20 billion in 2021 due to criminal activity, according to Juniper Research — an 18% increase versus 2020.
Justt’s product combines AI with human reviewers to gather evidence refuting illegitimate chargeback claims and work with credit card companies on behalf of merchants. Justt integrates with merchants’ payment providers, kicking off dispute resolutions when the platform’s algorithms detect potentially incorrect chargebacks.
“The pandemic has shifted buying online, driving a boom in online transactions and a resultant increase in fraudulent chargeback activities. That has led many merchants to realize that their existing laissez-faire approach to chargebacks is not scalable or sustainable — and that, in turn, has driven a surge in demand for chargeback mitigation solutions,” Tahor told VentureBeat via email. “Justt has seen business skyrocket during the pandemic, not only because chargeback fraud has increased, but also due to merchants who are simultaneously facing other pressures — economic turbulence, supply chain issues, labor shortages, and more — that make it hard to divert resources to in-house mitigation efforts.”
Valby, Denmark-based Justt was cofounded in 2016 by Tahor and Roenen Ben-Ami. Tahor was previously the head of social media at Adobe and Magento, while Ben-Ami served as a business risk manager and fraud analyst at Simplex.com, a cryptocurrency payments startup.
“While spearheading risk management efforts at Simplex, Ben-Ami began developing tailored manual processes to help crypto merchants to fight back against illegitimate chargebacks. He soon realized, however, that delivering customized mitigation support at scale for all industries rather than just crypto would require a new approach, with AI-powered automation to deliver an effective but hands-off experience for merchants,” Tahor said. “To create that solution, Roenen reached out to me. I’d seen merchants struggle with similar challenges — and grow frustrated with the low-tech, labor-intensive chargeback dispute process — while launching ecommerce social-marketing startup Shopial and serving as head of Magento.”
Justt employs AI and machine learning to customize mitigation processes on a merchant-by-merchant basis, according to Tahor. The platform builds evidence using various decision-making models for a dispute trained on data from a merchant’s transaction history, as well as live analysis of ongoing results.
Justt is currently processing millions of data points. By next year, that number is expected to grow to billions.
“Every transaction is indexed in relation to scores of chargeback reason codes used by credit card networks, providing key insights into the kinds of transactions that trigger chargebacks, and enabling us to rapidly identify and remedy potential fraud across a wide range of industries,” Tahor explained. “Every merchant’s Justt implementation is unique, but every merchant benefits from our ability to leverage big data from the vast number of chargebacks and disputes that we now scrutinize, spot patterns and signals amid the noise, and optimize our dispute tools in real time.”
Eighty-six percent of all chargebacks are probable cases of friendly fraud, according to one source, and merchants lose $2.40 for every dollar of chargeback fraud. At the current rate, the cost in revenue, merchandise, shipping costs, and fees due to chargebacks could approach the $30 billion mark by the end of the decade.
While Justt competes with Chargehound, Chargeback.com, Midigator, Chargebacks911, and ChargebackGuru in a fraud management solutions market that is anticipated to be worth $10.4 billion by 2023. The company claims it’s already processing 10,000 chargebacks per month for “very large” enterprise clients. Tahor attributes the success in part to Justt’s “contingency-style” business model, which only charges merchants when Justt recovers funds from a chargeback dispute.
“[Our competitors] either offer low-tech ‘hands-on’ manual products that require significant time and energy from merchants, or products that rely on non-expert outsourced teams to manage chargebacks for merchants,” Tahor said. “Justt’s solution delivers a simple but transformative core benefit — it’s a genuinely hands-off mitigation solution that delivers a radically higher success rate when contesting chargebacks.”
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