The only fix for this is to ring Microsoft Xbox Support and ask to speak to the xbox live billing department. The error is caused by suspected fraud on the account or from you trying to update your billing details and failing a number of times.

Some users have noted that the error occurred after settling bills on various online shops and online poker rooms but there’s no concrete word from MS about this.

You will need to ask for second tier support who should then arrange to call you back within 72 hours.

Alternatively you would need to create a new xbox live account.