Hi Chuck,
Yes, that's potentially true. However, quite often in a hosted scenario you don't use your private mail account, but one supplied by the host instead. That is, you specify something like localhost or SomeServerInTheirNetwork as the host which then handles mail sending for you. These servers typically just send data and as such don't expose your e-mail. Also, because they are on the local network, you often don't have to supply a user name and password. Exact options differ from host to host.
If you do need to store sensitive data, you can encrypt it:
http://msdn.microsoft.com/en-us/library/ms998280.aspx
http://forums.asp.net/t/1418785.aspx
But: what can be decrypted by software, can also be decrypted by humans....
Cheers,
Imar