After years of denying claims to Xbox 360 owners who experienced the dreaded E74 error, commonly associated with three flashing lights on the front of the console, Microsoft reversed itself and is now going to fix, for free, any 360 which experiences this error. The error will need to occur within the first three years of the warranty, which is the same as other problems that Microsoft has been fixing.

Also, if a customer has paid for an E74 related repair, Microsoft says it will refund their money.

According to the Microsoft website: While the majority of Xbox 360 owners continue to have a great experience with their console, we are aware that a very small percentage of our customers have reported receiving an error that displays "E74" on their screen. After investigating the issue, we have determined that the E74 error message can indicate the general hardware failure that is associated with three flashing red lights error on the console. As a result, we have decided to cover repairs related to the E74 error message under our three-year warranty program for certain general hardware failures that was announced in July 2007. We have already made improvements to the console that will reduce the likelihood of an occurrence of this issue. Detailed information related to the Xbox 360 warranty and resources for those who require repair can be found at www.xbox.com/support.

Microsoft will refund to customers the amount paid for an out of warranty repair due to a general hardware failure associated with the e74 error message. Those customers should automatically receive the refund within 4-12 weeks, and no additional action by customers should be necessary. However, if a customer has not received a refund by July 1, 2009, the customer should visit www.xbox.com/support before November 1, 2009 for information on how to place a claim.

GiN Readers have reported being asked to pay as much as $100 for repairs on their 360 after an E74 error. But now it looks like they will be getting their money back.