The term covered person refers to any individual or entity that offers or provides a consumer financial product or service. This includes any affiliates of such individuals or entities that act as service providers. In simpler terms, if you are involved in delivering financial services to consumers, you are considered a covered person under the law.
Covered persons are primarily defined within the context of consumer finance law. This term is relevant in various legal areas, including:
Individuals or businesses that qualify as covered persons may need to comply with specific regulations and may benefit from using legal templates and forms to ensure compliance.
Here are a couple of examples of abatement:
Example 1: A bank that offers personal loans to consumers is a covered person because it provides a financial service directly to consumers.
Example 2: A company that provides software services to a bank for managing customer accounts is also considered a covered person, as it acts as a service provider to the bank. (hypothetical example)
This term is defined under 12 USCS § 5481 (6) as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which aims to improve financial stability and protect consumers in the financial sector.
| Term | Definition | Difference |
|---|---|---|
| Financial Institution | An organization that provides financial services, such as banks and credit unions. | Covered persons can include individuals and affiliates, while financial institutions are typically larger entities. |
| Service Provider | A business that provides services to another business. | Covered persons include those who offer financial products directly to consumers, whereas service providers may not. |
If you believe you qualify as a covered person, it is essential to understand your obligations under consumer financial protection laws. You may want to:
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| Attribute | Details |
|---|---|
| Typical Fees | Varies based on services offered |
| Jurisdiction | Federal and state laws |
| Possible Penalties | Fines and sanctions for non-compliance |
Any individual or entity that offers consumer financial products or services qualifies as a covered person.