ITunes - Fraudulent account activity, Apple refusing to help

Question

Got 2 email receipts from iTunes last night, for 2 gift cards, one for £25 and one for £75.
Logged into my iTunes account via iTunes and there they were in my purchase history, sent to some unknown hotmail address.
Removed my card details and changed my password.
Contacted iTunes through their email support to get Apple to cancel those gift cards and issue a refund.
Got a reply in 90 minutes with an offer of 5 song credits and a clear "we cannot refund your card" along with a "contact your financial institution".
After another 3 emails form me, and 3 back from Apple I'm still left with the same line "we cannot refund your card". Sent them one more email last night which has so far been ignored.
Contacted the bank this morning only to be told they can't do anything as it's a checking account not a credit card(!) They informed me that it is Apple's responsibility to refund the money as it is down to them to ensure the transactions are authorised.
I'm heading down to the bank to fill out a charge back claim form which they will send to Apple but that's all they can do...
This is beyond ridiculous.
1) There should be a phone number for the iTunes store at least for fraudulent account activity.
2) Apple, like any other company CAN refund money to a card, saying they "cannot" is a downright lie.
3) Apple must be in breach of every consumer trading law in the UK (I use the UK store) with this policy.
4) I use a secure password, I use trusted networks and no-one has access to my Mac. How the **** did the hacker get in?
5) What should I do when both Apple and the bank refuse to help? To be honest I'm not annoyed at the bank as it's not their fault. This is a security breach of Apple's system and they're liable in my opinion.
I've bought 700 items through iTunes since it started and this is how they treat me. Well no more. That gravy train is over for them.
And don't get me started on the thousands upon thousands of pounds I've spent on Apple hardware and software...

Answer 1

Thanks for the info.
Annoyingly the rep in question (someone called Judy) refuses to escalate the issue to somene who can look into this and perform the refund.
This is absolutely ridiculous, you're basically left with no-one to talk to (she/they are now ignoring my follow-up emails) , I've never seen anything like it. I've heard bad things about the likes of Paypal and eBay but Apple seem keen to add themselves to the list of sites not to trust due to a complete lack of customer service and boilerplate responses. Heck, Im sure last year (or it may be this coming Jan 1st) UK law changed to require online retailers to post their telephone number on the site...
This useless rep is quoting me US Federal Law when I'm using the UK iTunes store and the terms and conditions on there clearly state that the transaction is covered under UK law...
And UK law says they have to refund me.
I've dealt with Apple for years, I've used the AppleCare helpline and the Genius bar many times and every time service has been A1. I'm genuinely amazed that this type of customer service goes on on the iTunes store... And especially about such a serious issue.