diff --git a/apps/backend/src/app/api/latest/users/crud.tsx b/apps/backend/src/app/api/latest/users/crud.tsx
index d7615c3c5..a0591a97a 100644
--- a/apps/backend/src/app/api/latest/users/crud.tsx
+++ b/apps/backend/src/app/api/latest/users/crud.tsx
@@ -254,7 +254,7 @@ async function checkAuthData(
     });
 
     if (existingChannelUsedForAuth) {
-      throw new KnownErrors.UserWithEmailAlreadyExists(data.primaryEmail);
+      throw new KnownErrors.ContactChannelAlreadyUsedForAuthBySomeoneElse("email", data.primaryEmail);
     }
   }
 }
diff --git a/apps/dashboard/src/components/user-dialog.tsx b/apps/dashboard/src/components/user-dialog.tsx
index 01bc5f3a4..8a206bde8 100644
--- a/apps/dashboard/src/components/user-dialog.tsx
+++ b/apps/dashboard/src/components/user-dialog.tsx
@@ -2,7 +2,7 @@ import { useAdminApp } from "@/app/(main)/(protected)/projects/[projectId]/use-a
 import { ServerUser } from "@hexclave/next";
 import { KnownErrors } from "@hexclave/shared";
 import { countryCodeSchema, emailSchema, jsonStringOrEmptySchema, passwordSchema } from "@hexclave/shared/dist/schema-fields";
-import { Accordion, AccordionContent, AccordionItem, AccordionTrigger, Button, Typography, useToast } from "@/components/ui";
+import { Accordion, AccordionContent, AccordionItem, AccordionTrigger, Button, Typography } from "@/components/ui";
 import * as yup from "yup";
 import { FormDialog } from "./form-dialog";
 import { CountryCodeField } from "./country-code-select";
@@ -22,7 +22,6 @@ export function UserDialog(props: {
   type: 'edit',
   user: ServerUser,
 })) {
-  const { toast } = useToast();
   const adminApp = useAdminApp();
   const project = adminApp.useProject();
 
@@ -128,13 +127,14 @@ export function UserDialog(props: {
       }
     } catch (error) {
       if (KnownErrors.UserWithEmailAlreadyExists.isInstance(error)) {
-        toast({
-          title: "Email already exists",
-          description: "Please choose a different email address",
-          variant: "destructive",
-        });
+        alert("Email already exists. Please choose a different email address.");
         return 'prevent-close';
       }
+      if (KnownErrors.ContactChannelAlreadyUsedForAuthBySomeoneElse.isInstance(error)) {
+        alert("Email already used for authentication. This email is already used for sign-in by another account. Please choose a different email address.");
+        return 'prevent-close';
+      }
+      throw error;
     }
   }
 
diff --git a/apps/e2e/tests/backend/endpoints/api/v1/users-primary-email.test.ts b/apps/e2e/tests/backend/endpoints/api/v1/users-primary-email.test.ts
index fceb78f7d..0b21b9dc3 100644
--- a/apps/e2e/tests/backend/endpoints/api/v1/users-primary-email.test.ts
+++ b/apps/e2e/tests/backend/endpoints/api/v1/users-primary-email.test.ts
@@ -433,6 +433,57 @@ describe("updating primary_email via users/me endpoint", () => {
       expect(updateResponse.body.primary_email).toBe(newMailbox.emailAddress);
       expect(updateResponse.body.primary_email_auth_enabled).toBe(true);
     });
+
+    it("should return a clear error when changing primary_email to an email already used for auth by another user", async ({ expect }) => {
+      // Create first user with email used for auth (via OTP sign-in)
+      await Auth.Otp.signIn();
+      const firstUserEmail = (await niceBackendFetch("/api/v1/users/me", {
+        accessType: "client",
+      })).body.primary_email;
+
+      // Create second user via server
+      const secondMailbox = createMailbox();
+      const createResponse = await niceBackendFetch("/api/v1/users", {
+        accessType: "server",
+        method: "POST",
+        body: {
+          primary_email: secondMailbox.emailAddress,
+          primary_email_auth_enabled: true,
+        },
+      });
+      expect(createResponse.status).toBe(201);
+      const secondUserId = createResponse.body.id;
+
+      // Try to change second user's primary_email to first user's email (with auth enabled)
+      const updateResponse = await niceBackendFetch(`/api/v1/users/${secondUserId}`, {
+        accessType: "server",
+        method: "PATCH",
+        body: {
+          primary_email: firstUserEmail,
+          primary_email_auth_enabled: true,
+        },
+      });
+
+      // Should get a clear error about the email being used for auth by another account
+      expect(updateResponse).toMatchInlineSnapshot(`
+        NiceResponse {
+          "status": 409,
+          "body": {
+            "code": "CONTACT_CHANNEL_ALREADY_USED_FOR_AUTH_BY_SOMEONE_ELSE",
+            "details": {
+              "contact_channel_value": "default-mailbox--<stripped UUID>@stack-generated.example.com",
+              "type": "email",
+              "would_work_if_email_was_verified": false,
+            },
+            "error": "This email \\"(default-mailbox--<stripped UUID>@stack-generated.example.com)\\" is already used for authentication by another account.",
+          },
+          "headers": Headers {
+            "x-stack-known-error": "CONTACT_CHANNEL_ALREADY_USED_FOR_AUTH_BY_SOMEONE_ELSE",
+            <some fields may have been hidden>,
+          },
+        }
+      `);
+    });
   });
 
   describe("edge cases", () => {