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billguardPersonal finance startup BillGuard has raised $10 million in second-round financing, and it’s using it to expand its service that helps protect accounts from fraudulent activity, the company said Tuesday.

BillGuard protects users by registering their credit and debit cards and keeping an eye out for questionable and fraudulent charges. The company uses a crowdsourced approach to identifying unauthorized charges, by not only providing its own detection but also incorporating users’ billing complaints to track and analyze payments.

BillGuard’s big second round of funding comes from a powerhouse group, including Khosla Ventures, Eric Schmidt’s Innovation Endeavors and Peter Thiel’s Founders Fund.

“At Khosla Ventures we love entrepreneurs who dare to tackle large problems with disruptive, bottom-up methods,” said Vinod Khosla, founding partner of Khosla Ventures, in a statement.

At present, BillGuard is free to use for anyone who wants to sign up. So how is it going to make money? The company is talking to large banks that could act as partners and incorporate BillGuard on a per-customer basis for a small fee. BillGuard is also exploring the idea of a merchant certification program that would let merchants have access to some its data, and follow up with customers who end up with fraudulent or questionable charges.

New York-based BillGuard previously raised $3 million in its first round of funding from Bessemer Venture Partners and IA Ventures. BillGuard made its public debut on stage at the TechCrunch Disrupt conference in May 2011.

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