Using a few common tools, hackers can extract credit card numbers and other personal data from Xbox 360 consoles, even if they have been reset to factory defaults.
Researchers at Drexel University confirmed this security hole that affects all Xbox 360 owners who sold their used consoles.
Interestingly, the researchers noted that Microsoft took proper security measures to protect its own secretes stored on the console, but not those of the user. "Microsoft does a great job of protecting their proprietary information," researcher Ashley Podhradsky explained. "But they don't do a great job of protecting the user's data."
If you want to sell your used Xbox 360, the research team recommends connecting its hard disk to a PC first and wiping it clean using any secure erase tools such as the ones listed here.
"A lot of [modders and hackers] already know how to do all this," the researcher warned. "Anyone can freely download a lot of this software, essentially pick up a discarded game console, and have someone's identity."