In relation to Regulation E, which transaction type must a bank be cautious about for overdraft fees?

The correct response highlights that a bank must be particularly cautious about overdraft fees related to ATM and one-time debit transactions due to specific regulatory provisions established under Regulation E. This regulation focuses on electronic fund transfers and the consumer's rights regarding these transactions.

Under Regulation E, financial institutions are required to obtain a consumer's affirmative consent before charging overdraft fees on one-time debit card transactions and ATM withdrawals. This means that if a bank does not have clear, express consent from the consumer to opt-in for overdraft services, it cannot charge overdraft fees when these transactions result in negative balances.

This emphasis stems from the importance of consumer protection, where the regulation seeks to prevent unexpected fees that can occur if the consumer is unaware of how overdraft fees might be applied to these specific types of transactions. It promotes transparency and provides consumers with more control over their banking services, ensuring they understand the implications of opting in or out of overdraft coverage. Therefore, this choice aligns with the regulatory context in which financial institutions operate, making it crucial for banks to pay careful attention to the management of overdraft fees in the context of ATM and one-time debit card transactions.