Xbox One users who swear or publish potentially offensive behaviour via the Upload Studio service will likely face a 24 hour ban from the application.
Over the weekend and on Monday, a growing number of users reported they were being suspended from the app - which lets players publish clips of their gameplay and commentary - for as long as 24 hours.
A system message posted online shows that the Xbox One will explain users are temporarily banned "because of your past behaviour".
Confusing the matter was a separate rumour that Microsoft is banning users for profanity on Skype - Microsoft denies this, adding that it does not monitor messages.
But the corporation did confirm it was punishing those who break the Xbox terms of service on the Upload Studio app.
"We take code of conduct moderation via Upload Studio very seriously. The team reviews every clip that is uploaded to the service to help maintain a clean, safe and fun environment for all users," a Microsoft spokesperson told CVG.
"Excessive profanity and other code of conduct violations will be enforced upon. On Xbox One, we have a more sophisticated system of enforcement. As a result, if someone misbehaves on the service, we may only suspend some of their privileges on Xbox Live such as access to certain apps or use of certain features.
"We remain committed to preserving and promoting a safe, secure and enjoyable experience for all of our Xbox Live members."
On the issue of Skype bans, a spokesperson added:
"To be clear, the Xbox Live policy and enforcement team does not monitor direct peer-to-peer communications like Skype chats and calls."