Microsoft is facing a class action lawsuit for the Xbox 360's chronic breakdown problems, a summary notes. Although the company has already extended warranties to account for the "red ring of death" -- a failure where regular overheating loosens chip connections and usually ruins the system -- a Sacramento County complaint accuses Microsoft of not only manufacturing a known defective product but of deliberately hiding the failure rate, encouraging customers to buy without warning them that their system will likely fail.

The document points to reports that claim Microsoft knew about the inherent flaw as long ago as the November 2005 launch, when the failure rate was potentially more than 50 percent. Studies from the turn of the year would still have the failures as high as 16.5 percent despite refinements to the production method and additional cooling. The failures have been predicted by some to stem from cost-cutting measures that include a reduced number of third-party components and relatively lenient testing.

The suit calls for a refund program that lets dissatisfied owners obtain a refund and would also demand that Microsoft give up profits from the Xbox 360 as punishment.

Microsoft hasn't commented on the lawsuit, which comes just as the company is believed to be quietly shipping revisions of the console with cooler graphics processors that will partially alleviate overheating issues. The issue isn't expected to completely disappear until the launch of a late 2009 update, nicknamed Valhalla, that would generate an all-in-one chip cool enough to prevent any overheating and also shrink the power brick [via macnn].