The Daily Mail reports that the 12-year-old boy thought he was using in-game currency earned from killing enemies in a Call of Duty title and scoring goals in a FIFA football game.
Instead, the purchases were made using his father's credit card, which was stored on the system when the family paid for an Xbox Live subscription so that the boy could play games online with his friends from school.
The father, Sam Ghera, only discovered the charges on his credit card when he went to the bank and found that his account had been overdrawn.
"When I went through my statement I saw that they were charges for Xbox Live," he said.
"I didn't even know that it was storing my information, and even if that thought had entered my head I would have thought there would be something in place so it wasn't so easy to spend money."
No password is required to make purchases over Xbox Live using credit card information stored on the system.
It should be noted though that the system does offer parental controls which can block child and teen accounts from making purchases over Xbox Live.
Making a purchase on Xbox Live always brings up a pop-up window asking the user to confirm that they are making a purchase with their credit card. However, this is often confusing to users since they are technically buying Microsoft points, a virtual currency that can then be used to obtain downloadable content, rather than the items themselves.
It is unclear exactly what was purchased with the Microsoft points charged to the account. The Daily Mail reports that it was spent on additional weapons for Call of Duty and player enhancements in FIFA, however those are not items offered to purchase over Xbox Live.
There are several multiplayer map packs for the various Call of Duty titles and downloadable expansions available for the FIFA football games, however all downloadable in-game content combined across all titles in those franchises totals less than £300.
It is advised that parents take advantage of the parental control settings included on video game consoles.