Microsoft Points scam costs the Xbox 360 manufacturer an estimated $1.2 million

A website popped up earlier this week offering free Microsoft Points. Sites advertising this are common, and they usually exist merely to farm personal information out of web surfers and possibly hit them with a virus or something similarly sinister. This one actually worked though, as a group of hackers had discovered an algorithm that allowed them “to add to existing, used codes to get new ones,” according to a report from Save and Quit.

As people who use Xbox Live Marketplace know too well, it is impossible to spend your cold, hard cash directly on things you want to buy there. Instead, MS Points must first be purchased from Microsoft. These are then applied to unlock paid content, including downloadable games, add-on DLC, movies/TV shows and the like. The system has attracted a lot of criticisms from gamers who frequently find themselves with leftover points and nothing to spend them on, which of course means wasted money.

MS Points can be added from your console with a few button pressed, but cards for various point denominations can also be purchased in stores. Each one features a 25-character alphanumeric code which must be entered in at the console’s dashboard in order to access the points. The codes are generated using a top-secret algorithm, which is what the hackers cracked, giving Internet-savvy no-goodniks an opportunity to load up on MS Points free of charge.

Enough people jumped on the opportunity to time out the website that offered it. Microsoft eventually took notice of the exploit and shut the scam down, but not before an estimated $1.2 million worth of content had been given away for free. More than that, it is believed that the nature of the exploit means that the company won’t be able to go after anyone who took advantage of it.

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