You never signed into any legal agreement, no paperwork was signed and you never recieved any credit from them, Paypal was simply a money transferring tool, and no profit was due to be made. They cannot affect your credit file, there all mickey mouse companies, no need to worry about this at all. I recieved a letter stating that my balance was £400+ from NCO and now i have a letter stating a balance of £160...now come on...make your mind up. They threats are endless! i work within a collections centre and I know for sure what they are threatening you with is illegal.