Well; their user agreement does specifically have statements regarding any alteration, copying, redistribution, or modification of the softwares contained in the system, or any of it's media or accessories.
That's a pretty wide range, and yeah, that includes modchips.
The interesting thing though-that's been in user agreements for quite some time; originally to protect companies against reverse-engineers who might copy the system itself, and manufacture cheaper versions of them(At the time, the system sale equaled profit, like the Wii does now), etc. It's nothing new, but now it has a different use; Modding.
Technically, installing a mod-chip is illegal on these things. It's nearly impossible for them to trace; and the odds of them doing anything about Joe-Moduser are slim to none. But companies like Nintendo and Microsoft have traditionally pursued action against people offering modding services. In my town, Craigslist has may people offering to mod xbox' and 360's, due to the simplicity of the job; I don't know how often they're taken down.
I will say, companies would have a slightly harder time going after you for true, compensatory damages, if you made customers sign a release form stating:
A.) They take full responisibility for the action they are hiring you to do, and that they fully agree that any legal or compensatory repercussions will be solely theirs.
and
B.) They agree not to violate any copyright laws with it.
This would *theoretically* alleviate any legalities on you, and most people interested in mods will understand that you have to cover your own hide. Everyone knows Nintendo isn't going to hunt down every user who mods their system; this would mean that they would automatically have to take action against a number of users, who by law have already accepted all responsibility for the actions long before Nintendo can even think to take action.
I'm not a lawyer, an attorney, nor do I have any legal training, these are simply something that could potentially make you a much harder target if you choose to continue offering your services on Craigslist. I garauntee you the group of lawyers who sent that message probably check all the CL sites in the state, if not the Country; they might get some sort of kickback for how many ads are pulled down or something. It could be a third party representative-type group; who has legal authority, written or express, to act on the big N's part. Who knows.
"Its not stupid, its advanced!" - The Almighty Tallest, Invader Zim
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