The steps today takes the form of the following:
• Resetting the entire Gamerscore for an account to zero
• The account will be unable to regain all previously obtained achievements and Gamerscore, however, the players will have the ability to gain future Achievements by earning them fairly, like the majority of the Xbox LIVE community does.
• The account will be clearly labeled as a cheater for the community to view on xbox.com. You can see an example here. In dash, the personal view of the gamercard will be labeled as well.
Xbox LIVE remains committed to keeping the service free of cheating in order to maintain a fair and level playing field for everyone.
To read more about Gamerscore corrections read the FAQ on Xbox.com
Edit: Added link directly to our internal test account Gamercard that shows the cheater section.