As reported by Joystiq.com, Microsoft/Xbox Live have now started to brand the cheaters they find. Not only do they completely strip them of their gamer score(Ouch!)but they have implemented a "Branding." You know that little spot you can put a Bio of yourself in that everyone can see? Well, see for yourself:

"Well, now there's a far simpler way: Microsoft will label them "cheater." The Xbox Live Sheriff has begun targeting players who "gain achievements through avoiding game play and the use of external tools" and, as a punishment, resetting their gamerscores to zero, making them "unable to regain all previously earned achievements," and lastly (though, most deliciously), permanently labeling them "as a 'cheater' for the community to view." And, since the "gamerscore correction will remain permanent without any way to appeal" there's a good chance we'll have yet another easy way of identifying cheaters on Xbox Live: the tinny static of their whimpering sobs."
You can check the whole story HERE