It was bound to happen sooner or later.

Abington IP, a law firm specializing in consumer class actions, has started an investigation into the recent Xbox LIVE bans.

Users who were banned from the service may wish to fill out the form available and take part in a Class Action Lawsuit against Microsoft if you were not refunded a prorated sum for the time left on your subscription.

An investigation is currently being conducted regarding business practices of Microsoft with respect to its recent cancellation of certain modified Xbox consoles for use with Xbox Live.

As has been reported widely in the media, tens of thousands of Xbox owners have had their modified Xbox consoles banned from Microsoft's online gaming service Xbox Live. Although modification of Xbox consoles is against the terms of use for Xbox/Xbox Live, Microsoft "conveniently" timed the Xbox console ban to occur just after the release of the new Call of Duty: Modern Warfare 2 game and less than two months after the release of the very popular Halo 3: ODST game.

This "convenient" timing may have resulted in more Xbox Live subscription revenues for Microsoft than it would have generated had these Xbox console bans taken place at some time before the release of Call of Duty: Modern Warfare 2 and Halo 3: ODST.

Additionally, sales of both Call of Duty: Modern Warfare 2 (published by Activision) and Halo 3: ODST (published by Microsoft Game Studios) would likely have been greatly diminished had the Xbox console ban occurred prior to the release of these games.

If you are an Xbox Live subscriber, had your modified Xbox console banned from Xbox Live, were not refunded a prorated sum for the time left on your subscription, and would like to participate in a class action against Microsoft, please submit your information.
Yeah, shaking my head at this as well.

**Update**

Additional reported problems resulting from the bans include, but are not necessarily limited to:
  • Disabling/altering Xbox functionality "NOT" associated with Xbox Live (HDD functionality for example)
  • Disabling/altering Xbox functionality "NOT" associated with piracy,

  • Obtaining information from Xbox consoles without permission of the owner.
  • There are other problems/consequenses associated with these bans that have been reported here and elsewhere.
As an aside, PIRACY IS A LEGITIMATE CONCERN for Microsoft and other content producers. Microsoft has chosen to use one of the most indiscriminate "weapons" in an effort to combat piracy. As a result, it has resulted in a great deal of collateral damage. Many people were affected who had nothing to do with piracy and Xbox console functions that have nothing to do with piracy were also affected or disabled.
Source: abingtonlaw.com