The code works by applying a hex to the characters after the code is typed. So after the hex is input, it changes the colors of ALL characters after the hex, until another hex is typed.

The hex key is the caret key or which can be typed using Shift+6. The hex is followed by a number, which will determine the color of the characters following the hex.

eg. will make "Pwnulatr" completely red.
but will make "Pwn" red and "ulatr" green.



Here is what I input for my name in this screenshot

Will this get me VAC banned?
NO. It was a feature included in the game as an easter egg, so it will not get you banned. However, people who don't know how to do it will accuse you of being a hacker a lot of the time, which I'm sure you can deal with ;)

Will the Hex (eg. ^2) be visible in my name?
When someone views your Steam profile, YES, but in-game, NO.

How/Where do I apply the code?
You apply this code to your ingame name, through Steam, or when you rename your classes. Note When you enter the code into your class name, the ^ and number will disappear and you will type in the color you input.
Here is how to change your name through Steam.