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This error is caused by exceeding one of the outbound sending limits as specified in the service limits or in outbound spam policies when you are restricted from sending email.
When this happens, you will not be able to send e-mails to that account, When you try to send email, the message is returned in a non-delivery report (also known as an NDR or bounce message) with the error code 5.1.8 and the following text:
"Your message couldn't be delivered because you weren't recognized as a valid sender. The most common reason for this is that your email address is suspected of sending spam and it's no longer allowed to send email. Contact your email admin for assistance. Remote Server returned '550 5.1.8 Access denied, bad outbound sender."
To solve this issue, please contact your organization administrators. They can remove users from the Restricted users page in the Microsoft 365 Defender or in Exchange Online PowerShell.
To remove a user from the Restricted Users list, please follow these steps:
- In the Microsoft 365 Defender portal at https://security.microsoft.com, go to Email & collaboration > Review > Restricted users. To go directly to the Restricted users page, use https://security.microsoft.com/restrictedusers.
- On the Restricted users page, find and select the user that you want to unblock by clicking on the user.
- Click the Unblock action that appears.
- In the Unblock user flyout that appears, read the details about the restricted account. You should go through the recommendations to ensure you're taking the proper actions in case the account is compromised. When you're finished, click Next.
- The next screen has recommendations to help prevent future compromise. Enabling multi-factor authentication (MFA) and resetting the password are a good defense. When you're finished, click Submit.
- Click Yes to confirm the change.
For more information, please visit Remove blocked users from the Restricted users portal - Office 365 | Microsoft Learn.
Best Regards