The National Financial Ombudsman has issued a warning regarding increased fraud activity involving virtual banking cards, following a 73 percent surge in digital banking fraud complaints during early 2025. The warning specifically addresses the growing occurrence of “manipulation of the payer” fraud, where criminals employ social engineering tactics to convince users to authorize payments to fraudulent recipients. These schemes are particularly challenging because they can bypass Strong Customer Authentication (SCA) protections, and unlike unauthorized transactions such as card cloning, they typically do not qualify for automatic reimbursement.
The warning comes amid a broader landscape of evolving digital payment threats, including sophisticated SMS phishing campaigns that have successfully compromised millions of digital wallets in recent months. To combat these threats, the Ombudsman has emphasized the critical role of user awareness when using digital payment instruments. The office advises customers to maintain strict confidentiality of their personal data and adhere to their banking institution’s security guidelines.
The guidance precedes new regulatory requirements taking effect October 9, 2025, which will mandate payment service providers to conduct real-time verification of IBAN and beneficiary information for credit transfers, ensuring customers are alerted to any inconsistencies before payment authorization. The requirements support broader industry moves toward enhanced authentication, including major technology companies’ push for passwordless authentication and strengthened multi-factor authentication standards.
The warning comes amid broader regulatory initiatives to enhance security in digital payments. Financial authorities are implementing improved safeguarding regimes for payments and e-money firms, with regulatory bodies introducing new compliance and security measures. Current data indicates that virtual banking and e-commerce transactions continue to face higher fraud risks compared to physical point-of-sale transactions, a trend that has prompted several major banks to accelerate their deployment of biometric authentication systems.
“The ‘manipulation of the payer’ fraud is particularly widespread in credit transfers, but it is also on the rise in card transactions,” stated the Ombudsman’s report. “This type of fraud is especially insidious, as fraudsters use increasingly sophisticated social engineering techniques to induce users to voluntarily arrange a payment to a fraudulent beneficiary.”
Sources: Report on Fraudulent Payment Transactions in Italy, The Payments Newsletter including Digital Assets
