I have been in contact with our web hosting company and they have looked into the issue. Here's their response:
"I tested Community Builder member mailing function a few times after turning on PHP display errors (reverted), disabling openbase directory restriction (reverted), increasing upload_max_filesize as per Community Builder requirements, but none of these changes helped in resolving or identifying the actual issue. I also checked and ensured that all Technical Requirements for Community Builder is met (as per :
www.joomlapolis.com/documentation/276-community-builder/getting-started/18468-turning-off-joomla-emails-to-new-users
).
Since Joomla's email functionality is working fine and no indicative errors are getting logged or displayed, I would recommend contacting the extension vendor, Joomlapolis for assistance on this issue. They would know how the email feature works and what causes the error. If it requires any server side changes in order to fix the problem, please let us know."
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