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A "phishing scam" appears to have been operating, with a bogus site tricking users of the service into giving their passwords and personal details with the promise of free Microsoft Points.
This allowed criminals access to their credit card information and small payments were taken in a bid not to arouse the suspicion of victims.
Other fraud victims have had money taken after criminals "befriended" them by playing games with them and asking for personal details in a casual manner.
These are then thought to have been used to guess passwords, in order to access the users' accounts.
Microsoft are now reported to be tightening up security on the service, but be careful out there anyway!
Have you been a victim of online fraud? Are people too naive? Comment below...