PhoneFactor (News - Alert) just decided that the current authentication method in smartphones isn’t quite enough. Yesterday, the company launched an application for authentication in smartphones and tablets that will allow you to report fraud whenever you see it. For the moment, the application will work for the iPad and iPhone (News - Alert). Versions for the Android OS will come out as soon as the kinks are worked out.

Its unique authentication method involves a pushed message to the tablet or smartphone, making an alert spawn on the user’s phone or tablet. This notification gives you the option to authenticate a transaction, authenticate with a PIN, refuse authentication, or report fraud from a source.

The PhoneFactor application offers multiple benefits over older password applications. The most notable benefit is probably its easy interface along with its fraud alert system. With the real-time fraud alert feature, you become notified of any transaction anyone who stole your credentials tries to make. If you authorized the person to make such transaction, but the application mistakenly saw it as a fraud attempt, you can authenticate the transaction with the touch of a button.

“There is a reason people use mobile apps to pay bills, check movie show times, and connect with friends: they are incredibly convenient,” said Timothy Sutton, CEO of PhoneFactor. “The same is true for using the PhoneFactor App for authentication. Users always have their phones with them and simply tapping ‘Authenticate’ when prompted by the app just could not be any easier. Users aren’t even aware of the security benefits of PhoneFactor versus security tokens, but they know that they like it better.”

If you want something to compare PhoneFactor to, you can relate it to User Account Control (UAC) in Windows Vista/7. Both provide real-time authentication messages for the user to better administer what goes on in his or her device.