Online console hackers; Encounter any and file a complaint against them?

So we're getting to a point where good and clean online gaming isn't becoming an option as of now. While I'm hearing the beef about a few console games riddled with players who can't play legit, I've went to Halo Reach matchmaking and haven't seen one (while my friend has found some). The only time I found a console hacker was a minimal one, but still a violation of the Terms of Use. It was in Modern Warfare 2 a half of year ago that I found one player who had blue text saying "FUCK", which his Xbox Gamertag isn't even that name (if it did, it would have caused a forced name-change), and blue text isn't even possible. So I filed a complaint against that user for account tampering. There may be other games that people are hacking into, including Dead Island and Gears of War 3, and I dunno if Uncharted 3's MP will suffer the same fate eventually.

There's also a trend on Xbox LIVE recently where tons of people are modding the skins of their avatars (mostly blue skins like Smurfs, or purple ones), which is hacking in the account beyond the Terms of Use. I found one online who was in my friend's party, told him that the other guy has a green skin and filing a complaint against that guy for system tampering.

So, anyone encounter hackers on Xbox LIVE or PlayStation Network in their career?

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I'm seen hacks on computer. Those are fun though.

It's about consoles, not PC. Like how they mod their consoles with a JTAG (look that up).

Besides, I'm a legit player which is why I made this topic.

EDIT: This is an example of how a console game gets ruined (and the hacker can't even play for shit even with hacks).

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We passed that point years ago.

And yes, I've encountered loads of people who hack games. Hell, one of the guys on my XBL friends list used to use gamesaves for damn near everything he could get his hands on just to crank up his Gamerscore. Shortly after getting the highest GS in Canada he sold his Gamertag, and his timing couldn't have been better: The GT got banned less than a month later.

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That sounds like a good way to make money.

I don't approve of the ethics behind it, but yeah, I have to admit there's quite a bit of money in taking advantage of people who put too much stock in an online number.

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Well yeah, that isn't right to do. Of course.

I've seen some while playing Modern Warfare 2 online, but how do you file a complaint on MW2, how do you even complaint on PSN actually? I can never figure it out, because this can get REALLY annoying that people can't just play normally.