If they are adament, then I think small claims is your only remedy. I am confused by your description of the service as an "accompanied" child service. I think it is the unaccompanied child service. The additional payment does not pay for someone to accompany the child however. It just ensures that the child is handed from staff to staff and in the care of the airline for the trip. I don't think anyone actually travels with the child.
If the airline took the money for this and then withdrew the service, I can think of no justification for them to keep your money. The only exception is if you booked the child onto the last flight of the day, which would be a breach of their own T&Cs. However, in this case, they should not have accepted the unaccompanied child fee.
I think you should write a letter outlining your complaint and a request for a cash refund. If no reply or positive response within 30 days, I would file a claim in the small claims court. You may wish to copy the letter to the DOT, but I am not sure they can help with this kind of complaint.
http://www.nccourts.org/Courts/CRS/P...uments/300.pdf