Looks like it was more than just you as well .. check this out:
http://techcrunch.com/2010/08/23/paypal-itunes-fraud/
Reports are appearing this morning about a major security hole in iTunes accounts linked to PayPal. At least one group of scammers has found a way to charge thousands of dollars to iTunes accounts through PayPal. One targeted customer told us, “My account was charged over $4700. I called security at PayPal and was told a large number of iTunes store accounts were compromised.” His email was filled with nearly 50 receipts from PayPall for $99.99 each. (Update: they were for “CastleCraft, Dragon Crystals (10000 Pack), Seller: Freeverse, Inc”). He was able to catch it before his bank disbursed funds to PayPal.
But others were not so lucky. A quick search of Twitter and Facebook shows that the problem is not isolated. Joey Bruce on Twitter laments:
Someone hacked my iTunes/paypal acct and drained everything from my bank account. Life is kicking me in the balls while I’m down.
A search of public status updates on Facebook uncovers more people with the same issue:
Darn…what a day! Someone hacked into my itunes account and bought a crap load of downloads and emptied out my paypal account….grrrrr. . . . Paypal is very cooperative but there is just about no way to get ahold of itunes. I did call paypal and they assured me that they had contacted itunes and it was going to be taken care of in my favor.
so apple/itunes had a security breach & someone bought over $500 worth of music through my paypal account. just what i wanted 2 b dealing w/ while in San Diego! AWESOME!!!
Everybody watch your itunes account closely. I just got hacked for almost $1000.00 worth of software, videos and music. Hopefully paypal will refund it all. . . . This happened within the last few hours. Once transaction after another.
AT least PayPal is aware of the issue, but it seems like the problem is on the iTunes side.