Jinn

Unfortunately, no. The Privacy Settings control who can see your Profile, Gamerscore, Online Status, Games Played, and Friends list. It has nothing to do with private chatting. You can have up to 4 1on1 chats and switch between them, but it's a hassle.

I generally just play games that allow my friends and I to be on a team alone together against unknown opponents. That way, when the game starts (not in the lobby), I hear only their voices and only they hear mine. COD4 is that way.

As for the lobbies? Mass muting, or wait the 30s until the game starts again.

Most games also give the option of "Private Matches" - you'd have to only play against each other, but it's a way to guarantee the chat status is only you and your friends.

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