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Microsoft is actually pretty stringent in regards to lagging exploits. They do actively search out cheaters, and ban them sometimes in game. This is one reason that Live users have a report user option. I assume that once a player gets enough reports filed against them Live security then begins to actively monitor their play. Once that happens a pathological cheater is living on borrowed time.

I once watched as a clan I was playing against in Halo 3 big team battle all using lagging exploits got hit with the ban hammer in mass. Only two players in that clan surviving the purge. One who had left the game on while they went to eat dinner, and another who for whatever reason had opted not to cheat like his clan mates. The player that was away from the keyboard for most of the match told those of us left what happened in the post game lobby.

He had come back to the game after getting a call from another clan member asking whether he had banned as well. I am sure when he came back he was sweating bullets. I guess without Live security actually seeing him exploit he had been spared, but I am sure he probably swore off cheating from that day forward. Close calls have a way of changing your perspective.

I am somewhat surprised if I am understanding this correctly the PSN network does not in fact have enforcement? That boggles the mind why would anyone want to play on such a network. I have a low tolerance for cheating, and I could not stomach the fact that I would be helpless in the face of it.