When I worked for Xbox, I once got a call from someone who said that he had video proof that someone was cheating at Halo on Xbox Live (actually, I got a bunch, but one of them stands out for some reason) and he wanted to know what I was going to do about it. I told him there was nothing I could do about it. It's against Microsoft's policy to actually do anything about it.

The guy was being way too dramatic, though. I thought he was going to cry or something. He was taking it way too seriously.

Fun fact: Xbox customer support has this ridiculous script they're supposed to read when someone calls in about cheaters on Live. It's so bad it's funny. It's all like "Oh, it's really too bad that there are cowards on Xbox Live [they actually use the word 'cowards'] who have to cheat to make up for their own lack of skill. When you run into a cheater, give negative feedback. It can be frustrating, but keep in mind that some day, they'll lose!" and crap like that. Yeah, like the thought of another player losing on Live is going to make everything better. xD I refused to read that script.