It's not just former Microsoft employees who have been defrauding the company of thousands of dollars worth of software.

Some individuals have been falsifying their personal information, claiming to be Microsoft retail-sales representatives in training, in order to dupe Microsoft and turn software prizes into cash.

Microsoft has gone on the offensive, as of late, prosecuting former employees for allegedly stealing software and reselling it for profit. On Wednesday, a third former Microsoft pleaded guilty of stealing software. Company officials have said they are putting more checks and balances in place to head off this type of behavior.

But it's not only on the inside where Microsoft needs to tighten its controls.

To help train and incent sales associates charged with selling its wares at retail, Microsoft created two online training sites. The sites offer participants "points" for successfully completing the training courses on Microsoft software packages, peripherals and Xbox consoles. Sales associates can redeem the points for Microsoft products via Microsoft's "PrizeShops." Prizes include games and other Microsoft software and hardware. (Some courses even qualify associates for consumer-electronics prizes such as digital cameras or music systems.)

It seems a number of individuals have been falsifying their retail employment status — with some fabricating retail employers outright, and others lying about their employment status — in order to qualify for prizes. Hundreds of individuals have claimed they have gone so far as to win thousands of dollars worth of Microsoft software, then turn around and resell it on eBay or by some other means. The "winners" are boasting about their scams on private forums.

Says one such poster: "returned 2 copies of office XP to office max for $600 a piece, then sold the gift cards to a large local buisness, that didnt mind helping me out. The two copied of windows xp sold for $175 a piece on ebay with brings my total too...1550 or so the tv was on clearence for 1299 and it was about 1400 out the door."

It turns out there is no proof of employment required by Microsoft on its training sites. All a potential participant need do is sign in with a Microsoft Passport.

Following a query by Microsoft Watch, group marketing manager John Porcaro, said the company plans to audit the registration base, tighten the evaluation of applications, and implement other security measures to curtail this type of fraud in the future.

Additional reporting by Nate Mook of BetaNews.com.