535 Incorrect authentication data

Error :

2008-08-02 11:18:23 fixed_login authenticator failed for (localhost) [127.0.0.1]:54412 I=[127.0.0.1]:25: 535 Incorrect authentication data

Permissions for /etc/passwd and /etcshadow are fine.
/scripts/eximup –force did not help either.

Solution :

There can be multiple reasons for this.

First, check whether the folder ‘etc’ located at /home/”username”/etc/ has the ownership username:mail . If not, then correct that.

chown username:mail /home/username/etc/ -R

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If that does not resolve the issue then check the permissions for the folder /home/username itself. It should be 711.

In one such case, it was set to 700. So, the mail group process couldn’t get down into /home/user/etc/domain to read the passwd file. Hence, the error.
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Another scenario when this can happen is when the option “Allow mail account authentication using the password of the domain owner’s account” in WHM -> Server Configuration -> Tweak Settings is enabled.
Webmail logs you in but attempts to use the cPanel account password via SMTP. Hence, the problem.

Disable the option and check.
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If none of these resolve the issue then try running /scripts/upcp .