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In this video, consumer protection attorney Bill Clanton discusses adverse action letters. These letters are issued when a consumer is denied credit based on their credit report. They inform the consumer of the denial and outline the reasons behind it. This is crucial for allowing individuals to review their credit reports for any errors that may have contributed to the denial. Adverse action letters are mandatory when creditors reject a loan application, commonly encountered in scenarios like being turned down for a car loan. Understanding these letters helps consumers address potential inaccuracies in their credit reports.