By Jon Hood

January 29, 2010

Microsoft has been named in a class action claiming that the company's "fraudulent" XBox Live points system "collects revenues for digital goods and services which were not provided."

Lead plaintiff Samuel Lassoff, of Horsham, Pa., says an invoice he got earlier this month included charges for games that couldn't be successfully downloaded because of hardware problems. The charges weren't an accident, Lassoff says, but rather part of a Microsoft "scheme to unjustly enrich itself through [its] fraudulent handling of his account."

Even before Lassoff's suit, XBox points have been the subject of increasingly withering criticism, to the point that Microsoft is considering abandoning the system altogether. Gamers routinely kvetch that the system leaves users with leftover points that aren't enough to put toward the purchase of a new game.

Under the system, points are purchased with real currency, usually via a debit or credit card, and can be put toward the purchase of an xBox game or other downloadable media. The problem, according to disgruntled gamers, is that the number of points purchased rarely lines up with the number needed to buy a given item, so users are left with spare points that can't be put toward a subsequent purchase.

For those who aren't gamers or gearheads, an analogy may be in order. The quandary faced by XBox users is one seen all too often by users of mass transit. In 2007, for example, recalculated New York City subway fares added a bonus of $1.05 to every $7.00 fare card purchased. Rides cost $2.00 each. Thus, a straphanger who paid $7.00 ended up with an $8.05 card -- good for four rides and a leftover nickel. He then has to save up 20 cards worth $0.05 a piece until he has enough to trade in for a full ride.

In addition to this algebraic nightmare, users claim to have had their accounts hacked and points stolen, raising questions about the security of the "XBox Live Marketplace." These complaints and others have reportedly led Microsoft to consider letting the sun set on the points system, and have gamers pay for games and media directly with cash.

Lassoff says that, at the very least, "hundreds" of other XBox users have paid for games that never ended up on their consoles. He maintains that Microsoft was contractually obligated to provide "the complete, whole, and or actual digital goods and services purchased," and that it failed to warn him of "point fraud due to incomplete and or partial downloads." His suit includes counts for negligence, unjust enrichment, and unfair business practices.

Read more: http://www.consumeraffairs.com/news04/2010/01/xbox_points_lawsuit.html#ixzz0e9uY7Qj9

InformationWeek reports on a class action suit filed against Microsoft by a Philadelphia-area attorney over Microsoft Points, the pointless ersatz currency that acts as a middle-man in transactions on the Xbox LIVE marketplace. The article mentions two aspects of the system cited in the suit, being charged for incomplete downloads (which sounds a little like suing a store because you left the items you bought sitting at the checkout) and how the points are sold in bundles that rarely match up with the prices of items, leaving customers with unused funny money in their accounts. Interestingly, this comes shortly after indications from Microsoft that they may allow the use of real currency in their service. I.W. also notes that this is not the first high-profile lawsuit by this lawyer: "Records show he sued Google in 2006, claiming the search ads he placed fell victim to click fraud. He also sued Bally's Casino in Atlantic City in 2005, claiming he was attacked by a drunken patron while sitting at a poker table."

And why cant the point system be as straight forward as wii points?

Microsoft Person says: "That would be copying Nintendo! They might sue us! I am being a sarcastic jerk!" (Ok, maybe he'd just be thinking that last part).

But yeah, that's what I think they'd say.