"535 Incorrect authentication data" when sending email

[dan]

I've been trying to add users to FusionAuth and the 'Send Email to set up password' has been enabled, but the users don't receive emails.
I see the following error in the logs:

Async Email Send exception occurred.
Template Id: REDACTED
Template Name: Setup Password
Tenant Id: REDACTED
Addressed to: REDACTED
Cause:
javax.mail.AuthenticationFailedException : Message: 535 Incorrect authentication data

What's going on?

[dan]

Ensure you are not using a reply address from @fusionauth.io; if you are this will fail our DMARC policy.

You don’t necessarily want to remove this reply address, but it should not be using our email domain. Instead it should be an address that belongs to your organization, such as no-reply@example.com. (Or, even better: customersupport@example.com--I hate when I get an email I can't reply to, myself.)

Each email template also has the option to override that default value with a different value. So you may also want to audit each email template to ensure if it is using a different From address, it is also owned by your domain.