Paypal account not accepted

I got an Ipod touch from my nephew when trying to load a free app (facebook) it says Payment Method  Payment type not accepted, then in red it says there is a billing problem with a previous purchase. Please enter another payment menthod.   I went into the itunes store and into account and added a credit card but the ipod keeps saying the same thing. I'm not sure what to do. I'm new to using an Ipod. 
Thanks.

Contact iTunes:
Apple - Support - iTunes - Contact Us
iTunes Store: Accepted forms of payment

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