A group of hackers have scammed Microsoft out of $1.2 million after finding a way to generate new Microsoft Points out of old point codes. 

Microsoft Points is the currency for online stores such as the Games for Windows - Live Marketplace, Zune, Windows Live Gallery and the Xbox Live Marketplace. There are plenty of sites that provide free Microsoft Points, but it's rare to find one that is authentic. 

But on March 7, a team of hackers did some damage to Microsoft's pocket when they developed an algorithm that allowed them to use old MS Points codes to make new ones. They then created a website that allowed anyone to do the same just by refreshing the page. 

Each time a user refreshed the page, a new 160 point code would be available. Eventually, a heavy amount of traffic to the site yielded problems, which caused a 404 error message. 

Microsoft was able to pull the plug on the site, but still ended up losing $1.2 million in MS Points. No announcements have been made in regards to what Microsoft plans to do about this. 

The Escapist magazine posed the question as to whether Microsoft has a way of distinguishing which points are legitimate and which are counterfeit, so Microsoft could ban those who try to use the hack versions, but it is unknown whether the consumer electronics and software giant has these capabilities.