In a report over at Kotaku, it was suggested that hackers could pull your credit card information from your old Xbox hard drives.
Restoring your console to factory settings will not wipe all the data from the drive. This revelation is the result of an ongoing study from researchers at Drexel University. Researcher Ashley Podhradsky told Kotaku that, “Microsoft does a great job of protecting their proprietary information,” but are poor at protecting the user’s information.
The researchers bought a used Xbox 360 and used basic hacking tools and were able to crack open and retrieve information of the previous owner which included his credit card information.
Podhradsky recommends to detach your disc drive and connect it to a PC and use a sanitization program. Microsoft has yet to comment on the matter.