It’s never a good feeling knowing that a service that you use may be vulnerable to hackers.  It’s even worse knowing how easy it is to do.  According to Inside Gaming Daily, Eurogamer and AnalogHype have posted reports of findings behind the latest Xbox Live hacks.  Essentially, hackers use your gamertag to find profiles on other websites that you have linked your gamertag with and use the associated e-mail address as a base to see if it is your live ID.  Then, through scripting and other means of automation, hackers “brute-force” your password and gain access to your account, where they can do untold damage, especially if you have a credit card on file with Microsoft.

Best word of advise I can give in a situation like this, use a strong password, including lower/UPPER case letters, numbers, and special characters and no words or easily identifiable numbers (Wikipedia).  One other thing that frustrates me a little about live accounts is that the max password length is 16 characters, but that’s typically long enough for the casual user.