A front page report in today's The Sun, titled 'Xbox Cyber Fraud', said that many of its users had been the victim of a phishing scam.
Microsoft has since clarified the story, stressing that the service and its security have not been compromised.
"Xbox Live has not been hacked. Microsoft can confirm that there has been no breach to the security of our Xbox Live service," read a statement.
However, it said that a number of users had been victims of such phishing scams, where personal information had been acquired through deception, such as through a fake website or person.
It said that those affected by such scams can get in touch to help resolve the issue, and that the company is doing what it can to warn users from unauthorised requests for their personal information in future.
Xbox Live's new dashboard update, which features a new Metro layout and additional entertainment services, has been given a release date.
The PlayStation Network was taken down in April following hacker activity. Sony executive Tim Schaaff recently described the hacking as "a great learning experience", but added: "I would not like to do it again."
Read Microsoft's Xbox Live statement in full:
Xbox LIVE has not been hacked. Microsoft can confirm that there has been no breach to the security of our Xbox LIVE service. In this case, a number of Xbox LIVE members appear to have recently been victim of malicious 'phishing' scams (ie. online attempts to acquire personal information such as passwords, user names and credit card details by purporting to be a legitimate company or person).
The online safety of Xbox LIVE members remains of the utmost importance, which is why we consistently take measures to protect Xbox LIVE against ever-changing threats. As a result, we are currently:
- Working closely with affected members who have been in touch with us to investigate and/or resolve any unauthorized changes to their accounts resulting from phishing scams;
- Warning people against opening unsolicited e-mails which may contain spyware and other malware that can access personal information contained on their computer without their knowledge or permission;
- Reminding all customers that they should be very careful to keep all personal information secure whenever online and never supply e-mail addresses, passwords or credit card information to strangers.