ClaimScore, a startup that uses artificial intelligence to help detect fraudulent claims in class action lawsuits, has closed a $3.15 million seed funding round led by ROC Venture Group, a private investment firm based in Naples, Fla.

Founded in 2022, ClaimScore says it is the only software product dedicated to resolving the problem of claims fraud in class action settlements. To date, it says, it has helped companies avoid $340 million in fraudulent payouts.

The round, which was oversubscribed by $1.15 million, will be used to fund the company’s continued growth and general operations, with a focus on expanding its offerings for law firms, in-house counsel, and claims administrators.

ClaimScore was founded by its president, Donald Beshada, a 25-year class action litigator; CEO Bob Gallo, a serial entrepreneur and former financial advisor; and Bryan Heller, a founder and product owner for AI tech startups in both the consumer and B2B spaces.

A Growing Problem

Claims fraud is a growing problem, fueled by AI and social media. Last year, companies paid out $51.3 billion in class action settlements, and ClaimScore says fraud is prevalent in 99% of class action cases.

The company says that influencers on TikTok and other social media platforms are helping to drive an increased volume in claims, urging their followers to take advantage of “free money.”

In addition, AI and other technology tools are being used to submit fraudulent claims by generating scripts that change names and IP addresses.

ClaimScore uses AI to review each claim in real time and report results in an interactive dashboard. Its algorithm assigns each claim a score that starts at 1,000 and is reduced each time a claim fails a criterion. It recommends that claims that score below 700 be rejected.

“We’re making claims processing, validation and fraud identification faster than humanly possible to speed up the legal process and to create unprecedented transparency for everyone,” CEO Gallo said in a statement. “This funding round empowers us to bring ClaimScore’s benefits to the wider legal community.”

Aaron Stafford, founding partner at ROC Venture Group, said that ClaimScore addresses a gap in the market that he was not even aware of until he met the founders.

“After a deep analysis of the space, we quickly saw the potential for ClaimScore to disrupt and level-set the class action space, solving a nefarious problem that must be eradicated,” he said.

“It’s in these niche corners of the tech universe where innovative companies like ClaimScore are making huge impacts, and that’s exactly where we like to invest.”

Photo of Bob Ambrogi Bob Ambrogi

Bob is a lawyer, veteran legal journalist, and award-winning blogger and podcaster. In 2011, he was named to the inaugural Fastcase 50, honoring “the law’s smartest, most courageous innovators, techies, visionaries and leaders.” Earlier in his career, he was editor-in-chief of several legal publications, including The National Law Journal, and editorial director of ALM’s Litigation Services Division.