A big launch can lead to big piracy, especially with the console version of Modern Warfare 2, which was available online for modded Xbox 360 systems for a week or more before launch. Microsoft knows you shouldn't be playing the game before its official release, and activity on Xbox Live gives them an easy target. Consequently, an unknown number of consoles have been permanently banned from Xbox Live.
The techniques Microsoft uses to separate those who have wrangled early copies of the game from retailers and pirates remain nebulous, but once a console has been banned from Xbox Live, the system is useless to anyone who wishes to play online. That's a problem—or an opportunity— for the second-hand market, as waves of banned consoles are now up for sale on eBay and craigslist.
No online play, but free games!
The banned consoles come preloaded with hacks and, in many cases, copies of popular games. The problem isn't with gamers who knowingly buy a banned system in order to play copies of software or to simply enjoy offline, the issue is that there is no easy way to check if a console has been banned or not aside from logging into Xbox Live.
Microsoft's Major Nelson put it bluntly. "This would also be a good time to remind you that the warranty on an Xbox 360 console is not transferrable and if you purchase a used console that has been previously banned, you will not be able to connect to Xbox Live," he explained. If you're in the market for a used system, in other words, this is a large risk with the seemingly high number of banned consoles hitting the secondary market.
The problem is that when a retailer like GameStop takes a system in, it at the very most will plug the unit into a television to make sure it works. No one is going to connect the system to an Internet connection to check and see if the console has been banned. You can't tell by looking at it, and if you find yourself in possession of a banned console, Microsoft is going to be unsympathetic to your plight.
There is no magic bullet. Many systems that have been banned are being sold with the caveat that online play has been disabled on the unit, but it's impossible to tell how many Xbox 360 systems are being put on eBay or traded in to GameStop that can no longer go online. If you're buying a system on the secondary market, this is a good question to ask. If you're buying at a store, be sure to check out the return or exchange policy if it turns out the system has been banned.
The downside to modded consoles
A pirated game is copyright infringement, not theft, and it's doubtful that the cops are going to bust in your door simply for buying an inexpensive modded system loaded with burned games. If you're not modding systems for profit or putting your tools online, it's a civil, not criminal, infraction of the law. Having a modded console may put you on the wrong side of the DMCA, but the authorities have much bigger fish to fry when it comes to criminal action and lawsuits.
That being said, you'll never be able to update your system to the newest firmware. You won't be able to play against your friends online. So many of the features that make the Xbox 360 worth owning are tied into Xbox Live; permanently banned systems are crippled in a very tangible way. With systems available new for as low as $200 and used, non-banned systems available for less if you do some digging, it's not worth giving up so much just to save a few bucks.
Releases of huge titles like Modern Warfare 2 lead to spikes in piracy, which is a good excuse for Microsoft to bust out the Xbox Live ban hammer. It's doubtful that this deters pirates in any real way, but it's an inconvenience, and may work to discourage gamers who may be tempted by piracy. So be aware of what you're buying if you're in the market, and be sure you understand just how much you're giving up by buying a modded system, no matter how many games it comes with.
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