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I received an notice on my iPhone saying, "iPad is now using". This is my email address but I don't have an iPad. What does this mean? Thank you.

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It is right about Christmas time. (spoiler alert) There isn't a chance someone will be gifting you with a configured iPad, is there? If there isn't, I would investigate further. – bassplayer7 Dec 24 '13 at 0:48
Change your iCloud password right now. – Jash Jacob Dec 24 '13 at 1:20

If the notice were a pop up, then someone knows your Apple ID and password and entered them into another device.

If it's an email, you will want to check first that it's from Apple and perhaps log into to check that your account is secured, perhaps changing the password if you feel that is warranted. If you do this, make sure you also change the password to your email, as someone could use that to reset your Apple ID password.

Basically, Apple wants to make sure you know every time you set up a new device with your Apple ID since if you didn't allow it, someone else will then have access to your messages, your apps, etc...

Worst case, you can contact Apple Support if you can't resolve this as they might have better advice specific to your situation and be able to assist in locking / recovering control of your account. Also, if you use the same password here as you use on any other account - they could be compromised as well so you might want to change any account that uses your email and that password going forward.

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Your hotmail account may have been compromised ("hacked").

Or this may just be a phishing attempt to reveal your password or go to a particular site which may then infect your computer.

If I was in your situation, I would check the legitimacy of the mail first (google it), then I would change my password on my hotmail account.

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