Instead, Microsoft thinks that its customers are having their accounts hijacked by cyber criminals.
According to the Sydney Morning Herald, the situation is being watched closely because insecurity experts have been waiting for another PlayStation Network security breach to happen. In that case, millions of customer accounts were made public and the network was shut down for a month.
While it might have been a bit tighter on security than Sony, Microsoft has been slow to publicly address hijacked Xbox Live accounts.
But Xbox Live users who have had their accounts compromised and facilitated to make unauthorised transactions have been moaning for months. They say Microsoft has been slow to assist customers and restore access to their accounts.
Last month, Redmond improved security on its Xbox.com website, which seems to have been how hackers got access to user account information.
The general manager of Xbox Live Alex Garden penned an open letter about security on Xbox Live that acknowledged “account hijacking across the internet continues to grow”.
Garden described how there was a surge of personal information being compromised and sold but Microsoft said that there was no evidence of a security breach in the Xbox Live service.
Microsoft says the most common sources of security attack are social engineering, phishing, malware and using the same passwords.