I ran into this head-first as I worked a deal with a friend trading my Wi-Fi iPad for her Verizon 4G model. The 4G iPad arrived and in short order its was restored from my previous iPad backup. The initial setup came to a screeching halt when I tried to set up the 4G data with Verizon.
Normally this first time setup is easy to do on the iPad. The Settings | Cellular Data option steps new owners through the process of setting up a prepaid data plan and getting it activated.
This used iPad had already been activated and instead of a new setup I was confronted with an existing account login. I needed the email address and password of the original owner's account to get in to do anything. Obviously I didn't have that information, but I figured that shouldn't matter since this used a prepaid account with no carrier contract required.
I called Verizon technical support and explained the situation, that this was a used iPad I wanted to set up. The technician was quite nice and had me try a number of things to get the original account deleted so I could set up my own. The original owner of the iPad also unnecessarily stepped up to help me out with the original account information.
He transferred me to the prepaid technical support department (yes, they have one) and after explaining my situation once again I was told I would have to visit a Verizon store to get another SIM. Verizon's technical support staff are not allowed to send out iPad SIMs for prepaid accounts.
Off I went to the local Verizon store, where I spent a total of two hours. After trying to figure out a way to get me a prepaid SIM, the store manager came to the conclusion that they could not give me one at all. They couldn't even sell me a SIM, as all SIM disbursements must have a newly purchased iPad attached to them.
It was suggested I could try the Apple store, but the manager admitted that Apple didn't have loose Verizon SIMs to hand out. The end result? Verizon cannot activate a previously activated iPad for new prepaid service. The original owner has to delete his/her account, and that kills the SIM. Which Verizon cannot replace.
The choice I was left with was no choice at all. I had to add the 4G iPad to my existing Verizon account with its monthly bill. This is a post-paid data plan, meaning I cannot manage the plan on the iPad as you can with prepaid accounts. I can activate/deactivate the 4G data at will, but I must go through Verizon to do so.
This is a disadvantage, so those looking to buy a used iPad better avoid the Verizon models. The prepaid SIM can only be activated once, after which it is no good and cannot be replaced with the prepaid plan. Even though the original buyer paid full price for the iPad the availability of prepaid data goes only with that original activation. Then it's no prepaid data for you.
Note that this only applies to the new iPad with 4G LTE, as that is the only Verizon model that requires a SIM card. Earlier models that are 3G only do not use a SIM so they can be reactivated as needed.
All is not lost, as I already have a phone and Mobile Hotspot device under contract to Verizon. Adding the iPad to the mix now makes the Share Everything data plan on Verizon, available today, economically attractive to me. Adding the iPad means I can now switch everything to the new plan where all three devices will share data, and save a few bucks.