Sender ID is Microsoft's proposed e-mail sender authentication protocol designed to protect against domain spoofing and phishing exploits. The Sender ID Framework, as Microsoft calls it, comprises three separate specifications: Sender Policy Framework (SPF), Caller ID for e-mail, and Submitter Optimization. Briefly, here's how it works: The Domain Name System (DNS) maintains SPF records for domains. When an e-mail message is received by the inbound mail server, the server looks up the sending domain's published DNS record and determines whether the sending server's IP address matches the one on record. If the record matches, the e-mail is authenticated and delivered to the recipient; otherwise, the message is either discarded or returned to the sender as bounce e-mail.
Domain spoofing is often used to make recipients think that a fraudulent message comes from a legitimate source; the sender is likely to be phishing (pronounced fishing) for information that will give them access to the recipient's resources, such as credit card numbers, user names, and passwords. These messages often purport to come from well-known companies; AOL, BestBuy, MSN, PayPal, and Yahoo have all been imitated. When the attacker pretends to represent a well-known company, the exploit is sometimes called a brand spoof.