Microsoft has issued a statement in response to an exploit that has been spreading like wild fire among the Xbox Live community over the past few days, allowing gamers to obtain free Microsoft points.

Some media sources claim that the scam has cost Microsoft $1.2 Million after a website generated codes allowing gamers to pocket the points that can be used to buy products on the Xbox Live Marketplace.

Speaking with Gamasutra, Microsoft said it is looking into the matter.

"We take safety and security very seriously and require that Xbox Live members use the service in compliance with applicable laws and specifically prohibit people from engaging in illegal activity as a part of our Terms of Use and Code of Conduct," reads the statement.

Our Policy and Enforcement team is evaluating whether or not certain individuals have violated the Terms of Use for Xbox Live and will take the appropriate enforcement on an individual basis. Codes obtained legitimately by users will not be impacted."

The website has since closed down.