Microsoft today admitted that it had mistakenly banned some Xbox LIVE accounts which had not been modified or tampered by their users, due to a software issue. Typically, Microsoft's Policy and Enforcement team for Xbox LIVE prevents consoles from accessing the service that are involved in bad behavior such as cheating, fraud, running unauthorized software on the service, or playing illegitimate copies of games. For the vast majority of its actions, the team reviews a lot of data, examines the behavior, and then we take action. In some cases, the team uses software features on the Xbox itself to help them take action.

However, a recent ban of some Xbox 360 individual consoles had been triggered inaccurately. The bans were related specifically to modded consoles, according to Stephen Toulouse, the head of the Policy and Enforcement team for Xbox LIVE.

"After an initial investigation we have confirmed that a handful of banned consoles did in-fact appear to not have been modified or tampered with," Toulouse said. "We're still conducting our review but the cause appears to be a software issue, not an error on the part of the enforcement team's normal actions. It's very specific and occurred between August 29 and September 9, affecting a very small percentage of users," he added.

Microsoft said that it would reverse the specific bans.

Within a few business days, Microsoft will issue the primary account holder on the impacted console a credit for three months of Xbox LIVE Gold and 1600 Microsoft points. Those users do not need to take any action, as everything will be applied automatically, Microsoft said.

"I'd like to take a moment to personally apologize for the inconvenience this has almost certainly caused to the affected customers. You have my assurance that we are investigating how this error occurred and have since discontinued use of the software that was used. The Xbox LIVE community is the best out there and we regret the inconvenience this may have caused for our loyal members" , Toulouse added.