A bank's ability to charge overdraft fees for which type of transaction is limited by Regulation E?

Regulation E, also known as the Electronic Fund Transfer Act, provides consumers with protections regarding electronic funds transfers and sets out rules governing how financial institutions can charge fees for such transactions. One key aspect of Regulation E is its limitation on overdraft fees, particularly concerning ATM and one-time debit transactions.

When it comes to ATM withdrawals and one-time debit card transactions, financial institutions need explicit consumer consent before charging overdraft fees. This is designed to protect consumers from incurring unexpected fees when they do not have sufficient funds in their account to cover these types of transactions. If a customer has not opted in to an overdraft service for these transactions, the bank cannot charge an overdraft fee if the transaction exceeds the available balance. This requirement aims to ensure that consumers are treated fairly and understand the terms under which fees may apply.

In contrast, checks and automatic bill payments do not have the same restrictions under Regulation E regarding overdraft fees. While banks may still charge overdraft fees for these types of transactions, the regulation specifically emphasizes the need for consumer consent in the context of ATM and one-time debit transactions, making these transactions uniquely subject to limitations under Regulation E.