Says the filing: "Microsoft has engaged in a scheme to unjustly enrich itself through their fraudulent handling," of accounts.
Although we do not know the exact details of what occurred with his account, the points system being a ripoff is not a new claim. $20 USD will get you 1600 MS points, unlike Wii virtual points, where that same $20 will get you a more straightforward 2000 points. The points you buy also never seem to add up correctly for games you want to buy and you are left with leftovers that are useless until you supplant them with more points.
Because some users just let those points go to waste, Lassoff says "Microsoft breached that contract by collecting revenues for digital goods and services which were not provided."