Microsoft just commented on the most recent wave of Xbox Live Bans. Microsoft have blocked/banned consoles because their owners had modified the equipment to play games they had not paid for.

"If it's clear someone is downloading pirated copies or have modified their Xbox in some way that will allow them to download games that they haven't purchased legitimately and yes we lock that account down and we're unapologetic about that," he said.

Xbox LIVE Policies on Console Suspensions
We’ve designed the Xbox LIVE service to help create a place where our members can interact and have fun online. To help protect that experience for our customers, the Xbox LIVE Enforcement team monitors the service for behavior that violates the Xbox LIVE Terms of Use and Code of Conduct. Violations of the Xbox LIVE Terms of Use and the Code of Conduct can result in a variety of actions, up to and including a permanent suspension of a console from connecting to Xbox LIVE. This page is meant to detail some of the reasons that a console could be permanently suspended from the service.

We take console suspensions seriously, and only take such action after a lengthy investigation by multiple teams. When a console is suspended from accessing the service, it will display the following message:


“This console has been banned for violations of the Terms of Use. To protect the Xbox LIVE service and its members, Microsoft does not provide details about console bans. There is no recourse for Terms of Use violations.”

Consoles can be suspended from Xbox LIVE for a number of reasons including, but not limited to:

• Console tampering: Physically opening the Xbox and modifying it to play illegitimate software.
  
• Online fraud: Attempting to social engineer users, take over Xbox LIVE accounts, or other fraudulent activities.
  
• Repeat egregious violations: Multiple actions taken on accounts on the console by the Enforcement team for disrupting the service or impacting users.

Customer Support for Xbox LIVE cannot undo an Xbox LIVE suspension for a console. Xbox LIVE console suspensions may also include permanent suspensions of Xbox LIVE accounts as well.

To avoid a console suspension, please review and follow the Xbox LIVE Terms of Use and Code of Conduct. We also recommend that you purchase Xbox 360 consoles new from reputable retail stores because previous owners may have violated the Terms of Use agreement which can lead to the console being suspended. Warranties on Xbox consoles are not transferable from the previous owner .

Everyone on the Xbox and Xbox LIVE teams want our members to have the best possible experience on our service. By following the Terms of Use and Code of Conduct, you can help us work to create safe and enjoyable experiences while enjoying Xbox LIVE.

Frequently asked questions:
I have not committed any fraud, I’ve never had action taken against me by the enforcement team, and I know for a fact I have not modified my console. Can you undo my suspension?

The investigations and subsequent actions taken by the Xbox LIVE enforcement team are conservative in nature. We work very hard to try to fully understand that a console has been modified by looking at a variety of information. Sometimes it’s possible that a previous owner or another user may have performed unauthorized modifications to the console. It is also possible that the purchaser of a used Xbox 360 was not aware the console was modified. In either case we cannot undo the console suspension. We recommend customers who believe they have not modified their Xbox themselves (or committed other actions on the service to warrant suspension) to contact previous owners or users of the console.

How do you detect modified consoles?
There are many factors that lead to the suspension of a console and we do not publicly disclose any of those details.

My console has been suspended. Does that mean my Xbox LIVE account will be suspended as well?
Suspensions for both consoles and accounts are determined by looking at a number of factors. While some Xbox LIVE account suspensions may be issued alongside console suspensions, they are not issued with every single suspension. To avoid having your account suspended from the service, please follow the Xbox LIVE Terms of Use and Code of Conduct.

If a console is suspended, what happens to the warranty?
If a console has been modified or tampered with, the warranty is void and the console is ineligible for an authorized repair, even for a fee. Please refer to the Xbox 360 console Warranty on xbox.com

Can I still be banned if I purchased a modified console second-hand?
Yes. The warranty on a second hand console is void, and the purchaser assumes the risk for any previous modifications. If you purchase a console that has been previously suspended you will not be able to connect to Xbox LIVE.

Why does my banned Xbox 360 no longer install to hard drive?
Once a console has been banned from Xbox LIVE, in order to protect the integrity of the Xbox ecosystem and its members, that console loses its ability to create trusted content. This means that, for example, the console can no longer create profile and game data that is recognized by other Xbox 360 consoles or on the Xbox Live service, and it cannot create trusted game files or recognize previously created game files using the install to hard drive functionality. The inability to create trusted content does not impact the console’s ability to play from discs in the optical disc drive.

If I have a banned console, can I still access my achievements and content?
If your account has not been banned, you are still able to recover your account on an unmodified console. This includes accessing your purchased content and your profile, with achievements, as it existed prior to the console ban.

Can I move my hard drive to an unmodified console?
Yes, to an unmodified console.

News-Source: www.xbox.com"