I'm not a big online game player -- Words With Friends is about it, and I'm not nearly as hung up on it as Alec Baldwin is -- but this article is interesting when it talks about people who cheat while playing online games.
Gaming communities will spot and label cheaters. These could be people who use some sort of programming shortcut in a game, like the old keystroke combinations from Doom! that would let you have a chainsaw whenever you wanted (answer: All the time!), as well as walk through walls or be invulnerable. Or they could take advantage of some kind of computer assistance, like people who will play Words With Friends via a program that will automatically calculate the best words and positions to play them.
These are only a couple of the ways people cheat, but what happens in the different gaming communities is that those folks may or may not be banned from playing the game -- but they are identified and might find themselves shunned. "Join a game with these folks at your own risk," is the unofficial warning.
Some folks in one gaming community tracked some statistics about the cheaters among their members. They tended to congregate in the same games or on the same forums, apparently, which made me wonder what a game would be like if nobody followed the rules. A friend suggested maybe like "Calvinball," but Calvinball has rules. They're made up on the spot and they change from one second to the next, but they do indeed exist. You never break a rule in Calvinball, you just make up a new rule that gives you the advantage you seek.
Also cheating seemed to be contagious. People who weren't identified cheaters but who were linked with the cheaters were more likely to be labeled as cheaters or to start cheating on their own. But people who were indentified as cheaters starting upping their privacy settings and cutting themselves off from their networks within the gaming community.
So catching the games' cheaters is like a game of its own. I expect an Xbox version any day now.