Another day, another story about a kid experiencing something inappropriate over Xbox Live. Sadly, these things will happen and Microsoft can't do all that much about it. The Xbox 360 already has a fairly robust system of parental controls, and Microsoft recently even launched a family timer to physically limit play times.
In a way, Xbox Live is a victim of its own success. The Wii has such restricted online features that nothing too offensive can physically be done at all, and because of the limited functionality, not all that many people play any given game online to begin with. Sony's console had (and still does to a lesser extent) a high price tag, so its adoption rate into families was much slower. Also, the online network isn't quite polished yet, so again, you have fewer people using it.
However, Xbox Live is not only the most popular online system on consoles today, but it is also the most full-featured one, so the millions of active users have many ways to send something inappropriate through the network. Microsoft is trying to push it as a family console, it has good brand recognition and a reasonable price. As a result, a lot of families and kids play games on the console and on Xbox Live. And again, Microsoft can't do much more than the user reporting/banning that they take care of already.
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