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Hotmail should only be used as a 'throwaway' account you don't intend to keep. It's probably the most insecure email service out there. I'm not surprised the account has been compromised.
be sensible and not cheapskate. Pay a modest sum for a decent email service if you want higher security. And most of them can be accessed on the web nowadays (not just POP3) so hotmail is no longer the only choice for those who need 'anywhere' access.
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