Does Xbox One "Factory Reset Default" feature wipe hard drive?

It deletes all personal information. The drive isn't formatted because that is where the operating system that makes the console run is stored.

As to if the file system is encrypted. I'd say not as you can view files on the PC. It's the files themselves I would say are encrypted, which is why we've not yet seen any Xbox One game mods.

Remember that if you do pull the drive from the console in order to wipe your data before selling it, chances are you're not going to be able to sell it. People aren't going to buy a console that has clearly been tampered with. Not only are they not going
to know what you've been doing in there but Microsoft won't touch it with a barge pole for a repair should it ever be needed.

Follow the advice above. Do the reset and then change the password on your account. Even if someone could restore your profile, they won't be able to access anything because the password would now be different.

 

I question whether the console even stores any info such as credit cards and whatnot. That stuff's in our MS account online, but I doubt there's a copy of it on the console HDD.

I would wager a guess that the only piece of personal info stored on our consoles is our sign in credentials for the MS account. I'm pretty sure that password, at least, would be encrypted too.

Of course, I'm only speculating. Sorry OP, I know I'm not answering questions, just more to think about. I would love to hear from MS on the topic.

 

Yeah MS is not telling anyone what their Xbox "factory reset default" does in terms of data security.

One can only assume that their process is not bullet proof hence their obfuscation.

Its not just MS account info. Given wide scope of of MS and third party Xbox apps and services there is potentially a lot of personal content/profile on an Xbox HD.

The Xbox 360 was vulnerable:

kotaku.com/.../hackers-can-steal-credit-card-information-from-your-old-xbox-experts-tell-us

www.datarecoup.com/.../the-retrieving-private-data-from-an-old-xbox-360

Nothing I have seen makes me believe anything has changed in Xbox One.

Admittedly the threat is limited to technically aware people that have access to your Xbox HD eg people you sell it to, and those they sell it to later. Of course they would also have interest in doing the work, but its not hard if you know what you are
doing.

But to be blase about the potential threat and to have MS say "Trust me its ok" which is answer I got from Xbox support, is frankly not good enough.

Lets just hope that they do indeed encrypt identifying info for MS and 3rd party apps if it is saved on HD (temporarily or permanently).