Thanks for all the replies - didn't mean to strike off a heated discussion!
For those who have asked for proof, I'm not sure exactly what I can provide. It sounds like my only option is to walk away and hope that the experience provides a warning for others. IHG has never been a big brand for me in the past but that doesn't mean that it would not have been in the future. I've never submitted a BRG with any hotel chain, had a duplicate account, sold reward rooms etc. Heck, this is probably the first time that I've signed up for one of their promotions in a long time outside of the Big Win (during the latest, I completed 0 challenges).
Thanks for everyone's help. I might try calling IHG again next week when I'm a little less upset but based on my last conversation, I'm not hopeful!