Say an employee is out of the office, whether on vacation or driving to work. A hacker logs into his company's software using the employee's login and password. Phone Factor, which is installed as an agent watching logins to the server and also is integrated with Active Directory, calls the employee on his mobile phone, tells him via voice prompt that someone has logged into such-and-such application, and asks for his PIN number.
Some online services, like PayPal, have begun doing similar things, like sending a PIN number via SMS to a user who then enters that PIN into a browser form.
In this case, here's where the interesting part comes in. If the second factor of a two-factor authentication is a thumbprint or a USB key, the process would likely be over at this point, because it would likely require too much work for a hacker to reproduce a specific thumbprint or also steal a relevant USB key. However, since the second factor here is pro-active, the employee whose log-in is being used has the chance to notify his employer that someone is falsely using his log-in. With Phone Factor, the employee just hits #5 on his telephone keypad and that tells the employer that the log-in is fraudulent.
Innovative security organizations can take this one step further, Phone Factor sales senior VP Christopher Marshall notes. One financial institution that is a customer of Phone Factor, for example, sets up a honeypot whenever there's a false log-in, trapping the hacker inside a mock-up version of its site, even populating the site with false financial figures to keep the hacker thinking he's just struck gold. With the hacker still logged in, the security team swoops in, trying to pinpoint the hacker in a bid to aid law enforcement and figure out exactly who and where the hacker is.