I’ve heard people get banned from Xbox Live for many reasons. Some are deserved, while others were either very minor or not a legitimate reason. But, to ban a user and remove access to all the games that he/she had tied to their account? Bad move. One in many that Microsoft has made lately. Alienating your users, even those that deserve a ban?
Not cool. I have never been banned, nor do I want to, but this a bit overboard. Terms of Use? Is there a limit to how much the Terms of Use can really apply? Forfeit all the licenses if you are banned? Of course, with the always online requirement, this is easily obtainable.