What is mail relay?
Mail relaying occurs when mail is forwarded from someone else through your mail server. Forwarding mail through a mail server is perfectly natural as long as either the originator of the message or the receiver is a local user. If neither the originator nor the receiver of the message is a local user, it is called third-party mail relaying. Usually the mail servers can be configured not to accept third-party mail relay, but often they are not. Mail servers that allow third-party mail relaying are of special attraction to "mail spammers" for sending large amounts of junk e-mail under false identity.
How is it done?
Mail relay can best be demonstrated with an example. In this example, both the sender and the recipient are outside the local domain. The mail server is from an entirely unrelated third party to this transaction. The message really has no business passing through this server.
Since many network administrators have blocked out or filtered messages from known spammers, spammers have had to develop new techniques to evade the blockades. Spammers, therefore hijack third-party mail servers to get their junk e-mail through the spam filters. Another purpose seems to be to increase the number of messages they can spew, all at no cost to them. This is a theft and it damages the resources of those unfortunate companies that are the victims.
What are the consequences?
Crashed or damaged mail system
Mail systems of the companies that suffer from third-party mail relay may crash or get damaged, and they might even lose valuable data.
Extraordinarily high recovery cost
The companies will have to spend unplanned persons-hours to recover from the crisis.
Blacklisted and denial of service
The worst consequences are that companies that suffer from third-party mail relays, will often be blacklisted by other organizations on the Internet and therefore they might be cut off from various services they need.