We reported that Microsoft was taking away your right to sue the company in the latest Xbox 360 update by forcing gamers into neutral arbitration, while also blocking consumers from joining class-action lawsuits... unless they opted out of the clause by mailing a letter to Microsoft. It seems this isn't actually the case, as Microsoft has told Kotaku that you can't opt out: you need to give up these rights if you'd like to continue using your Xbox 360.

This is Microsoft's full statement on the matter:

Users must agree to the new clause to the Terms of Use in order to continue using Xbox LIVE. Changes to the Terms of Use are designed to ensure that our customers have an easy way to file a dispute without requiring formal legal action. They may now bring a dispute to our attention by filling out a simple Notice of Dispute form found at www.xbox.com/notice and mailing in documentation in support of their claim. We will then work to resolve the dispute to their satisfaction within 60 days. Any customer unsatisfied with the outcome of this informal process may easily initiate arbitration with the American Arbitration Association. 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 terminology in the ToS used to 'opt out' applies only to future changes made after this agreement," Kotaku reported. So you have to accept this agreement, and give up your right to class-action status and most legal action against Microsoft, but you can opt out of any future changes.