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In this video tutorial, consumer protection attorney Bill Clanton discusses adverse action letters. An adverse action letter is a notification sent when a consumer is denied credit or another opportunity based on their credit report. It outlines the reasons for the denial, allowing consumers to identify and address potential inaccuracies on their credit report. These letters are mandated when a creditor declines a loan application, commonly encountered after unsuccessful attempts for car loans or other credit requests. Understanding adverse action letters is crucial for consumers to protect their rights and rectify any errors in their credit history.