Microsoft has apologised to the residents of Fort Gay, US for banning a local citizen from Xbox Live.
The platform holder deemed the given location of Josh Moore as offensive - and ruled that it broke the terms of service. Because it had the word 'Gay' in it.
The name of the town is genuine - it sits in West Virginia, US - but the firm banned the unfortunate resident from Live nonetheless.
And when Moore subsequently contacted Xbox to explain that he had a valid reason to use 'Gay' in his profile, the firm was having none of it.
MS suspended his gaming privileges until Moore could convince them the location in his profile, "fort gay WV," wasn't a joke or a slur.
In fact, Fort Gay houses around 800 residents in Wayne County, along West Virginia's western border with Kentucky.
"At first I thought, 'Wow, somebody's thinking I live in the gayest town in West Virginia or something.' I was mad. ... It makes me feel like they hate gay people," Moore told AP.
"I'm not even gay, and it makes me feel like they were discriminating."
Despite pleading with customer services, Moore was warned by MS that if he put 'Fort Gay' back in his profile, Xbox Live would cancel his account and keep his $12 monthly membership fee - which he'd paid in advance for two years.
Stephen Toulouse, director of policy and enforcement for Xbox Live has now admitted that was a miscommunication.
"Someone took the phrase 'fort gay WV' and believed that the individual who had that was trying to offend, or trying to use it in a pejorative manner," Toulouse said.
"Unfortunately, one of my people agreed with that. ... When it was brought to my attention, we did revoke the suspension."
He added: "In this very, very specific case, a mistake was made," he said, "and we're going to make it right."
The incident isn't the first time Microsoft has been in hot water over its reaction to 'gay' appearing in Xbox Live profiles, however.
The firm agreed in March to update the Xbox Live Code of Conduct to allow 'gay', 'lesbian' and 'transgender' expressions on certain 360 profiles - so long as they weren't used offensively.