This week's Xbox 360 dashboard update wasn't all features and improvements, as the new Terms of Service—which players are required to agree to before they can continue using the system—contains a clause which effectively prevents Microsoft from being sued. Rumor had it there was an option to opt out, but now that hope has been quashed as well. Microsoft released the following statement to Kotaku today:
Customers may also choose to bring their claims in their local small claims court if they meet the normal jurisdictional requirements. For detailed information, please visit: http://www.xbox.com/en-US/Legal/LiveTOU."
The choice to opt out apparently only applies to future changes to the TOS, though it's still worth it if you ask us. Of course, Microsoft could always provide "an easy way to file a dispute without requiring formal legal action" without limited our legal rights, but hey, they wouldn't be Microsoft if they did.