phpList includes a robust bounce-handling system. It uses the "return-path" header of an e-mail to tell automated systems (that is, our subscribers' mail servers) who to inform about the failure to deliver our messages. This can be different from the "From" header in the e-mail, which is what the user sees when he/she reads our e-mail, and where out-of-office responses are sent.
phpList's bounce handling code requires the PHP "IMAP" module. This module implements functions in PHP for opening POP/IMAP mailboxes, and is a requirement for bounce handling. Ensure that your hosting provider includes this module.
You will also need a mailbox for the bounces to be delivered to. Depending on your server configuration, this could be a local or remote POP3, or (under certain special circumstances) simply a mailbox file.
Finally, for PHP 4.2.3 and greater, "safe mode" will need to be disabled.