The chances are they sold it and reported it stolen/lost to claim on insurance to get another handset.. Letting the police know would be worth doing as technically it's filing a false police report.. the coppers are none to impressed with that type of naughtiness

I could but I already got my money back now, and I even managed to keep the phone so in the end all was well.

Thanks for the advice though!

Except getting your money back AND keeping the phone means it now is genuinely stolen.

I personally wouldn't want to keep hold of it after that, get it back to the person you bought it off with proof of delivery in case anyone comes knocking on your door. Besides, just because it worked for a month doesn't mean it wasn't stolen in the first place, might just have taken a while for Vodafone to pull their finger out.

Or take it to the police with the details of what happened.

I am pretty sure that it was Paypal who paid me the money back, because his account had disappeared. He refuses to reply to me, either through the claim I made him on Paypal, or through contacting him through eBay. I am pretty sure this means that he doesn't want the phone back.

If anything, it is not stolen, it belongs to Paypal, and that being the case, they haven't asked me for it or mentioned it at all.

Thanks for the advice though.

haha want to send the phone to me? i'll buy it if it cheap

I am going to seek legal advice about the status of the phone and if I am permitted to sell it outside of the UK, I will put it on eBay for a fair price :P

Send me a private message if you wish to be informed of this if and when I do it. But for now, it may be illegal so no promises.

I think you should go to the police with this.
Beware, because at the end they can blame you for stealing even if you didn't.