Clarity Systems Closes Seed Round Led by LMnT Ventures to Tackle Returns Fraud

AI-powered scanning technology helps retailers detect return fraud in three seconds without opening the box

SAN FRANCISCO--(BUSINESS WIRE)--Clarity Systems, a retail fraud detection company, today announced the close of a $4.4 million seed round backed by LMnT Ventures, with participation from Regeneration VC, Humba Ventures, and Massive Technology Ventures. The Company’s system sees inside returned and received products in three seconds without having to manually open them - catching counterfeits, product swaps, and manipulation by comparing items or potential fraudulent items against the original manufacturer profile.

AI-powered technology helps retailers detect returns fraud in three seconds or less without opening the box. Clarity enables retailers to verify the contents of returned and received products, without opening the package. Similar to how an airport X-ray scanner identifies the contents of luggage without unpacking it, Clarity's system analyzes the product, and instantly detects anomalies such as counterfeit goods, product swaps, missing components, or other forms of return fraud.

Clarity Systems was founded by Andy Ruben, Darrell Whitelaw and Sender Shamiss, seasoned veterans of the retail and returns industry, who recognized the immediate need for market changing innovation to address returns fraud, which continues to be one of retail's fastest-growing challenges. Within the year, Clarity has already signed on major national retailers in their returns and receiving operations.

According to Appriss Retail and Deloitte, returns fraud costs retailers an estimated $103 billion in 2024, representing more than 15% of all returned merchandise. In response, many retailers have implemented broad return restrictions that create friction for honest shoppers rather than precisely identifying fraudulent activity. Clarity offers a smarter approach, using AI to distinguish legitimate returns from fraudulent ones in seconds, allowing retailers to reduce losses while preserving a seamless customer experience.

Quotes:

Andy Ruben, Cofounder and CEO of Clarity, said: “Retail fraud has become a professional industry, run at scale against the returns counter and the receiving dock, and most defenses were built for a shoplifting era. We built Clarity to catch it the moment it enters the building.”

Jeff Miller, Founder and Managing Partner of LMnT Ventures, said: “Return fraud is a stubborn, massive problem hiding in plain sight, costing the world’s largest brands billions and ultimately leaving everyday consumers to foot the bill. And it’s a problem that the founders, each with extensive experience in the retail and returns world have had to endure for decades. With Clarity’s advanced imaging hardware and proprietary AI models, this chronic problem is finally tractable. Importantly, this isn’t AI theory- it’s already happening on Clarity systems. This is a problem whose time has come and this is the team to crack it.”

Key Facts

Q: What is Clarity Systems?

• Clarity Systems is a retail fraud detection company that catches fraud without having to open an item.

Q: How much did Clarity Systems raise, and who led the round?

• Clarity closed a $4.4 million seed round, backed by LMnT Ventures. Other investors include Regeneration VC, Humba Ventures, and Massive Technology Ventures.

Q: How does Clarity Systems’ technology work?

• Clarity's technology combines diagnostic-grade X-ray intelligence with computer vision and AI to see inside the actual product, without opening the box; comparing each returned item against its original manufacturer profile and detecting counterfeits, component swaps, and product manipulation that manual inspection routinely misses.

Q: How big is the problem Clarity Systems is solving?

• According to Appriss Retail and Deloitte, returns fraud cost retailers $103 billion in 2024 and amounted to 15% of all returns.

Q: Who does Clarity Systems work with today? Does the Company have any customers?

• Yes, Clarity works with major national retailers in their returns and receiving operations.

About Clarity Systems
Clarity Systems is a retail fraud detection company. Its machines see inside returned and received items in seconds, without opening or unpacking them, and flag fraud the moment it enters the building. The machine flags; the retailer’s people decide. Clarity works with major retailers across returns and receiving. Learn more at claritysystems.ai.