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To "activate" a prepaid phone you should follow steps indicated by your local mobile servce provider. Procedures might be quite different. i.e.: If you mean on of those "disposable" cell phones selled by retail stores in "blisters" with a call card valid for 1 month, you must follow indications of the number of the "operator" you should call or their webpage.
Yes if a cdma phone is already associated with a line it must be decoded from that line to get a new activation. you either get the operator to decode it, which they will do alot of verifications or get to a professional to change the esn.
Call customer care from a land line phone, I activated my SIM card before and they didn't turn it on, turns out there was a $10 activation fee too, I only added $50 not $60 so I paid to add $10 more, and paid close to $1 in taxes to do so. But make sure your account is active with the carrier by calling them from another phone.
If the phone has ever been activated as a prepaid phone, the ESN is locked for 6 months, and verizon will not activate it on a postpaid account during that time. I suggest you tell the eBay seller this and try to get your money back. If however the phone has never been activated as a prepaid phone it should work fine, and you might try going to another verizon location (the rep might just want you to buy a new phone and sign another 2 year contract...)