While not explicitly mentioned, the "consumer alert" quite clearly relates to the release of the LV0 Key hack, which allows system updates to be decrypted and enables users to install any system update on the console, as long as they are running firmware versions above version 3.60. The hack also allows users to boot from alternative operating systems, a feature that was removed beginning in version 3.21, and run video games from copied game discs.
Sony said that unruly PS3 users who run the hack and refuse to remove it will be disciplined by being permanently banned from using the PlayStation Network and Sony Entertainment Network. According to Sony, the hack violates the "System Software License Agreement for the PlayStation 3 system invalidates the consumer's right to access that system."
The company said that it takes this measure to "help provide a safe, fair, online environment". Apparently, no users have been banned yet. However, Sony said that "consumers must immediately cease using and delete all unauthorized or pirated software from their PlayStation 3 systems," if they want to "avoid permanent termination" from the network.