I had a payday loan with a company that I found out today is illegal in my state. This company was originally supposed to withdraw funds on 9/22/08. They failed to do so. I revoked authorization for any payments to be withdrawn by them on 10/5/08. On 10/6/08, they submitted two payments to my bank account. These payments were posted to my account. My bank has initiated an ECS investigation on these two transactions. The ECS representative stated that I didn't have to send any supporting documentation with the affadivit. I have never had to dispute a claim before and I am nervous. What is the procedure of non-check card ACH/EFT withdrawals for dispute resolution? My state's Attorney General's office advised me to file a complaint against them and send this documentation to the bank with the affidavit. Am I sunk before I begin?
Your bank won't care if the loan is legal or not. That is not up to them. All they care about is if your withdrawal request was authorized by you, or not.
Your bank will review your claim to determine if you authorized withdrawals when you signed your loan documents, and if you properly placed a stop payment request that would supersede any prior authorization. They will make a decision to give you those funds back or not. If they do return the money to you, they may try to get it back from the lender or they'll take it as a loss. If they deny your claim, they'll explain why and you will have to go back to the lender to request a refund. In that case, your Attorney General may be able to help you.
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Your bank won't care if the loan is legal or not. That is not up to them. All they care about is if your withdrawal request was authorized by you, or not. 