One-Time Passwords vs Two Factor Authentication

In the modern world with the constant growth of online services, online financial services, social media, gaming platforms, and online banking, it is crucial to prevent hackers and scammers from gaining access to your accounts and personal information. This is where two-factor authentication (2FA) comes in. So let’s discuss which 2FA approach is the best for you. 

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Types of Two-Factor Authentication

So what is two-factor authentication? To provide an additional layer of security, one can request one or more factors for user authentication to prove identity. These factors include:

• Something you know (password, pin, security question, etc)
• Something that you have (smartphone, USB dongle, smartcard, etc)
• Biometrics (fingerprints, voice, retina scan, etc)

Examples of Two-factor or Multi-factor Authentication

OTP via SMS or email - the most popular and common 2FA method is when a service sends an SMS text message or email with a one-time password (OTP) to a smartphone or other device. As we'll see later, these aren't ideal forms of 2FA, with SMS being particularly at risk. 

One-time codes on paper or in a file - prepared in advance and generated by service codes, these codes can be stored on printed paper, in files, or even in a password manager (like TeamPassword) in encrypted mode.

Software Authenticators - This is a 2FA method that has become more popular recently. Users scan QR codes provided by a vendor (generated by authenticator software) and based on this code, the application generates a temporary password that the user enters along with the main password to complete the authentication process.

Push Notification - This is an easy to use, fast, and secure authentication method. Encrypted communication channels eliminate Man-in-the-middle attacks. The user just needs to approve or decline a request from the service on their smartphone to get access to an account.

FIDO U2F Hardware Authenticators - This is one of the most reliable and solid methods based on the open-source universal 2nd-factor standard (U2F). Users just need to plug in a USB dongle or bump NFC device to authenticate.  

Biometrics - This includes the likes of face recognition, fingerprints, and voice recognition. Innovations like Apple’s Face ID or Microsoft’s Hello are often used to access devices and online services.

OTP Vulnerabilities

While two-factor authentication (2FA) significantly enhances security, no 2FA method is entirely immune to attacks. Factors like poor implementation, insecure communication channels, and social engineering can expose users to risks. Among 2FA methods, one-time passwords (OTPs) delivered via SMS and email are considered the least secure. Here’s a closer look at the vulnerabilities associated with these OTP methods:

OTP via SMS

Despite its widespread use, SMS-based OTPs are one of the weakest forms of 2FA due to multiple vulnerabilities:

1. Lock-Screen Exposure: Many users enable lock-screen notifications, allowing intruders to easily read OTPs without even unlocking the device. This is a major risk, especially in crowded places or if a phone is stolen.

2. SIM Swapping & Cloning: Hackers can execute SIM-swapping attacks by tricking or bribing telecom providers into transferring your phone number to a new SIM card. All they need is a bit of personal information, like a Social Security number, which can be obtained through social engineering or data breaches. Once the attacker controls your phone number, they receive OTPs intended for you, allowing them to bypass 2FA and gain access to your accounts.

3. SS7 Exploits: The Signaling System 7 (SS7) protocol, used by telecom providers to manage calls and texts, has a critical vulnerability. Skilled attackers can exploit SS7 flaws to intercept SMS messages, including OTPs, without needing access to your device. This attack, though complex, has been used by sophisticated cybercriminals to hijack accounts, especially high-value targets.

4. Password Resets: Many services (e.g., Google, Apple) use SMS-based OTPs as part of their password recovery process. Attackers can intercept or redirect these OTPs to reset passwords, giving them full access to email accounts, cloud services, and other sensitive data. Once inside an email account, attackers can often pivot to gain access to numerous other services linked to that email.

OTP via Email

Email-based OTPs share similar risks but have their own specific vulnerabilities:

1. Credential Leaks: In cases of credential breaches, attackers can directly access the email account used for 2FA, rendering email-based OTPs ineffective. Once an attacker has access to your email, they can retrieve OTPs and potentially take over a range of accounts associated with that email address.

2. Phishing Attacks: Phishing is a common method used by attackers to compromise email accounts. If an attacker gains access to your email through phishing, they can intercept OTPs sent to that email, effectively bypassing 2FA on other services.

3. Account Chaining: Many people use their email accounts as a recovery point for other services. If an attacker gains control of your email, they can trigger password resets for numerous accounts (e.g., banking, social media, cloud storage) and gain widespread access to your digital life.

4. Delayed Detection: Unlike SMS notifications that are instantly visible, email OTPs can sit in your inbox for extended periods, giving attackers more time to act before detection. Also, many users don’t have multi-factor authentication (MFA) on their email accounts, making them an attractive target.

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Best Authentication Approaches

Using biometrics can be the most secure method when it comes to two-factor authentication. But let’s consider fingerprint theft for a moment. If something like that happens, biometric security approaches will be compromised for life. It’s impossible to change your fingerprint like a phone number. 

Using U2F (universal 2nd-factor standard) keys exclude digital interception, is phishing-proof and is considered the most secure 2FA approach. But the U2F method is not so widely applied due to some disadvantages. 

USB-A dongles are not compatible with different devices including smartphones or new Macbooks without adapters (most modern devices use USB-C). Also, U2F tokens can be pricey. It's recommended to use U2F keys for authentication for only the most significant accounts like online banking or main email accounts. 

The other reliable authentication approach is using software authenticators. They are easy to apply, offer a wide range of choice for developers, boast cross-platform compatibility, and additional features expand two-factor authenticator usage. Take into consideration that you need to choose a trustworthy software developer like TeamPassword.

Push notifications can also be a good choice for authentication. But there are some drawbacks you need to keep in mind with regards to this 2FA option, the most significant being that you’ll need smartphones and an internet connection to use Push Notifications. Also, fraudulent requests can be approved accidentally due to the user's carelessness like in the 2022 Uber Breach. 

Use TeamPassword to 

TeamPassword has a built-in TOTP authenticator, meaning that you and your teammates can securely access passwords and the account TOTP (Time-based One-time Password) in the TeamPassword web app. 

2FA for your TeamPassword vault is set up using software authenticators, and can be enforced for your entire organization (meaning employees are required to enable it). 

Multi-factor authentication is critical in modern cybersecurity, and TeamPassword enables secure, frictionless implementation of 2FA best practices. 

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