A small form-factor security device is provided that may be inserted in series with a telephone line to encrypt dual tone multi-frequency (DTMF) tones from a telephone to prevent unauthorized disclosure of sensitive information. A receiving device decrypts the encrypted DTMF tones to receive the original information sent by the telephone. The security device acts as a second factor in a two-factor authentication scheme with a tele-services security server that authenticates the security device.