[Federal Register Volume 76, Number 50 (Tuesday, March 15, 2011)]
[Notices]
[Pages 14010-14014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-6002]
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FEDERAL TRADE COMMISSION
Public Workshop: Debt Collection 2.0: Protecting Consumers as
Technologies Change
AGENCY: Federal Trade Commission (``FTC'' or the ``Commission'').
ACTION: Public Workshop and Request for Public Comments and
Participation.
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SUMMARY: The FTC announces that it will hold a public workshop on April
28, 2011, to address consumer protection issues that have arisen as
debt collectors avail themselves of advances in technology. The
workshop will explore developments in technology that debt collectors
use to gather, store, and manage information about consumers; to comply
with the law; to communicate with consumers; and to receive payment.
The workshop will provide an opportunity for government regulators,
industry members, technologists, consumer advocates, and researchers,
to discuss the costs and benefits of these technologies for debt
collectors and consumers. It will also address whether and how
collectors may use such technologies consistent with applicable laws,
including the Fair Debt Collection Practices Act and Section 5 of the
FTC Act, what consumer protection concerns arise from use of these
technologies, and what actions, if any, the Commission and other
policymakers should take to respond to those concerns. This notice
poses a series of questions on which the Commission seeks comment.
The event is open to the public, and there is no fee for
attendance. For admittance to the workshop, all attendees will be
required to show a valid form of government-issued photo
identification, such as a driver's license. Additional information
about the workshop will be posted on the FTC's Web site at: http://www.ftc.gov/bcp/workshops/debtcollectiontech/index.shtml.
Date and Location: The workshop will be held on April 28, 2011,
from 8:30 a.m. to 5:30 p.m., at the Federal Trade Commission's
Satellite Building Conference Center, located at 601 New Jersey Avenue,
NW., Washington, DC.
Workshop Agenda: Additional information, including an agenda and
panelist biographies, will be posted on the FTC's Web site at http://www.ftc.gov/bcp/workshops/debtcollectiontech/index.shtml.
Public Comments: Interested parties are invited to submit written
comments electronically or in paper form, by following the instructions
in the Instructions For Filing Comments part of the SUPPLEMENTARY
INFORMATION section below. Comments filed in electronic form should be
submitted by using the following Web link: https://ftcpublic.commentworks.com/ftc/debtcollecttechworkshop, and following
the instructions on the Web-based form. Comments in paper form should
be mailed or delivered to the following address: Federal Trade
Commission, Office of the Secretary, Room H-113 (Annex F), 600
Pennsylvania Avenue, NW., Washington, DC 20580, in the manner detailed
in the SUPPLEMENTARY INFORMATION section below. To be considered in
preparation for the workshop, comments must be received by Thursday,
April 7, 2011. However, comments will be accepted through Friday, May
27, 2011.
Requests to Participate as Workshop Panelists: FTC staff will
identify and invite individuals with relevant expertise to participate
as panelists. In addition, the FTC staff may invite other persons to
participate as panelists who submit requests in response to this
Federal Register notice. Requests to participate as panelists in the
workshop must be received on or before 5 p.m. EST, Tuesday, March 22,
2011. Persons filing requests to participate as panelists will be
notified whether they have been selected on or before Wednesday, March
31, 2011. For further instructions, please see the ``Requests to
Participate as Workshop Panelists'' section under SUPPLEMENTARY
INFORMATION below.
FOR FURTHER INFORMATION CONTACT: Leah Frazier, (202) 326-3224,
[email protected], Division of Financial Practices, Federal Trade
Commission, 600 Pennsylvania Avenue, NW., Mail Stop NJ-3158,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: When the Fair Debt Collection Practices Act
[[Page 14011]]
(``FDCPA''), 15 U.S.C. 1692-1692p, was enacted in 1977, debt collectors
contacted consumers to collect debts primarily through mail and
landline telephone, reflecting the means of communication then
available. Technological advances have expanded the tools available to
debt collection companies as they attempt to locate consumers, monitor
their employees' practices, communicate with consumers, and receive
payment on debts. The Commission examined these developments as part of
a broad review of the evolution of the debt collection industry at a
public workshop held in 2007. Using data gleaned from the workshop,
public comments, and the FTC's law enforcement experience, the
Commission issued a report in 2009, Collecting Consumer Debts: The
Challenges of Change--A Workshop Report.\1\ The Report recognized that
the legal framework for consumer debt collection had not been updated
to account for many technological advances, and that, in some
instances, the Commission lacked data on the use of new technologies in
the debt collection system.\2\
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\1\ Federal Trade Commission, Collecting Consumer Debts: The
Challenges of Change--A Workshop Report (Feb. 2009), available at
http://www.ftc.gov/bcp/workshops/debtcollection/dcwr.pdf
(hereinafter ``Report'').
\2\ Id. at 38 (lack of data on frequency of debt collection
calls resulting in ``hang-ups'' or ``dead air'' calls). The
Commission requested that interested parties submit information on
the use of certain technologies in debt collection. Id. at 42
(mobile phones); id. at 45 (caller ID); id. at 49 (voice-mail); id.
at 50-51 (e-mail and instant messaging).
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Further exploration of the impact of evolving technology on
consumer debt collection is warranted not only in light of questions
raised by the 2007 workshop and ensuing Report, but also due to
developments that have occurred since then, such as the increasing
popularity of social media networking sites.\3\ Facebook, which did not
become available to the general public until 2006, now has
approximately 150 million users in the United States,\4\ and some debt
collectors are using it to find and contact debtors.\5\ The technology
that debt collectors use to obtain, store, and manage information about
consumers also continues to evolve.\6\ In addition, collectors may be
using older technologies in new ways. For example, although electronic
mail (``e-mail'') is not a new technology, its use by debt collectors
to contact consumers has increased, giving rise to questions about its
treatment under the current regulatory scheme.\7\ Similarly, the use of
electronic payments continues to rise.\8\ Debt collectors, like many
retailers, have begun to accept payment from consumers
electronically.\9\ These trends call for a discussion of the relative
costs and benefits to consumers and the debt collection industry of
these technologies and correspondingly, whether there is a need for
action, including changes in law, policy, or industry practice.
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\3\ Social media refers to Internet Web sites that enable people
to network, communicate, or share information. Examples of social
media sites include Facebook, MySpace, Twitter, and LinkedIn.
\4\ See Facebook, Statistics, http://www.facebook.com/press/info.php?statistics (last visited Jan. 25, 2011).
\5\ See, e.g., Alexis Madrigal, Facebook Warns Debt Collectors
About Using Its Service, The Atlantic (Nov. 19, 2010), available at
http://www.theatlantic.com/technology/archive/2010/11/facebook-warns-debt-collectors-about-using-its-service/66831/#.
\6\ See, e.g., Press Release, Collections & Credit Risks,
Convoke Systems Adopted By Debt Buyers (Jan. 20, 2011), available at
http://www.collectionscreditrisk.com/news/news-release-convoke-systems-adopted-by-debt-buyers-3004747-1.html; Global Debt Registry
Recognized As Visa PCI DSS Validated Service Provider, Business Wire
(Jan. 31, 2011), available at http://www.businesswire.com/news/home/20110131006698/en/Global-Debt-Registry-Recognized-Visa-PCI-DSS.
\7\ Letter from FTC Secretary Donald S. Clark to Barbara A.
Sinsley & Manny H. Newburger, counsel for Vion Holdings LLC.
\8\ Federal Reserve System, The 2010 Federal Reserve Payments
Study: Noncash Payment Trends in the United States: 2006-2009 (Dec.
8, 2010), at 13 (``The number of electronic payments grew 9.3
percent per year from 2006 to 2009. The proportion of electronic
payments to overall noncash payments increased from 67.9 percent to
77.6 percent over the same period. The value of electronic payments
increased 6.0 percent per year, growing from 45.1 percent of noncash
payments in 2006 to 56.3 percent in 2009.''), available at http://www.frbservices.org/files/communications/pdf/press/2010_payments_study.pdf.
\9\ Report, supra note 1, at 20.
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As discussed below, advances in technology can affect the entire
debt collection life cycle, from locating consumers and communicating
with them to receiving payment.
Information Technologies
Advances in technology may assist debt collectors in managing the
flow of information about consumers and improving its accuracy. The
Internet, through public search engines and proprietary commercial
platforms, allows access to large quantities of information about
consumers in a consolidated and searchable format.\10\ Web-based social
media channels also contribute to the available pool of data, as they
allow consumers to post information about themselves online, including
the identities of friends and family members, whom collectors could
approach for certain information. Further, a variety of database
platforms now exist that purport to aid debt collectors in maintaining
and updating information about consumers.\11\ All of these technologies
may enhance collectors' ability to locate or skip-trace consumers and
verify the accuracy of their information. At the same time, however,
the collection and retention of what may be sensitive personally
identifiable information may raise privacy concerns for consumers.
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\10\ Report, supra note 1, at 18-19.
\11\ Report, supra note 1, at 17-20.
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Developments in technology may also aid collection companies in
complying with the law by enabling them to better monitor and constrain
their individual collectors as they communicate with consumers. For
example, certain software may allow companies to track both volume
level during calls and the words used and to record calls so that
companies can monitor for verbal abuse.\12\ Other software programs
might be used to limit the number of calls per day placed to a
telephone number, exclude placing calls to a telephone number before 8
a.m. or after 9 p.m. in the relevant area code, or otherwise limit how
frequently a collector dials a particular number.\13\
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\12\ See, e.g., Anne Rosso, Technology Tug O= War, Collector,
Dec. 2010, at 20.
\13\ See John H. Bedard Jr., Dialer Control, Collector, Feb.
2010, at 32.
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Communication Technologies
Post-FDCPA advances in communication technologies are of particular
import, since the existing legal framework focuses heavily on
communications between consumers and debt collectors.\14\ Technology
has expanded debt collectors' capacity to access consumers. Collectors
may use automatic or predictive dialers and recorded voice technology
to contact people more efficiently. Mobile phones now abound. Indeed,
many households have given up land line phones in favor of mobile
phones, enabling consumers to receive calls regardless of their
location.\15\ Additionally, means of communication exist today beyond
the simple voice and written communications contemplated by the FDCPA.
For instance, collectors sometimes send text messages using the Short
Messaging System. In addition, at times debt collectors use the
Internet to interact with consumers. Internet communications include
sending e-mails and instant messages as well as interacting on social
networking sites. While these communication
[[Page 14012]]
technologies may provide benefits, they raise potential consumer
protection concerns as well, including the security of electronic
communications, whether such communications satisfy the FDCPA's written
notice requirements, and how they implicate the FDCPA's prohibition
against contacting consumers at inconvenient times or places.\16\
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\14\ See, e.g., FDCPA Sec. 805(a)(1), 15 U.S.C. 1692c(a)(1)
(time and place restrictions on telephone calls from debt collectors
communications); FDCPA Sec. Sec. 805(c), 809(b) (written notice
requirements).
\15\ Report, supra note 1, at 16 (By June 2008, 16% of consumers
had replaced their landline telephones with mobile phones.).
\16\ FDCPA Sec. 809(a) (written validation notice from
collector to consumer); FDCPA Sec. Sec. 805(c) & 809(b) (written
notices from consumer to collector); FDCPA Sec. 805(a)(1)
(convenience restrictions).
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Payment Technologies
Debt collectors, like many retailers, offer payment options to
consumers other than cash or check, such as credit, debit, and stored
value cards and automated clearinghouse transactions (``ACH'').\17\ As
discussed in the Report, these technologies can benefit consumers and
debt collectors alike by streamlining the payment process and, in some
cases, allowing consumers to engage in online negotiations with
collectors.\18\ The Report, however, also identified the potential for
unauthorized debits as a significant consumer protection concern
arising from the use of electronic payment technologies.\19\
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\17\ Report, supra note 1, at 20.
\18\ Report, supra note 1, at 20.
\19\ Report, supra note 1, at 51-55.
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The Workshop
The workshop will focus on post-FDCPA advancements in information,
communication, and payment technologies. Workshop panelists will
discuss, among other things, the effects that these technologies have
had on the debt collection industry, the prevalence of their use, best
practices for their use, what consumer protection concerns they raise,
and what responses those concerns may warrant.
The Commission seeks public comment and data submission on the
topics and questions set forth below or any issue raised by this
notice. Comments or data submissions may address the issues raised in
these questions or other issues relevant to the topics to be addressed
at the workshop. Any interested person may submit written comments. In
preparing for the workshop, the Commission will consider comments
received by April 7, 2011. Later comments will be accepted as well
through May 27, 2011.
Topics for comment and discussion include:
1. What technologies have come into existence since the enactment
of the FDCPA that have significantly affected consumer debt collection,
or are likely to do so in the future? What are the nature and magnitude
of these effects?
Information Technologies
2. Have any advances in technology been made that could increase
the likelihood that collectors will contact the correct consumer
regarding the correct debt amount? What are the costs and benefits of
using any such technology to consumers and the industry? How commonly
is such technology being used? Does its use vary by size or type of
debt collector? If its use is not widespread, why is that the case?
What role, if any, should the Commission or other policymakers play in
fostering the use of such technology?
3. Have technological advances changed how and where debt
collectors obtain information about consumers and debt? How have
technological advances affected the efficacy of skip-tracing and
recovery rates? What are the recent innovations in skip-tracing
applications? What are the sources of the data they access about
consumers?
4. What technologies do collectors use to maintain information
regarding consumers and debts (e.g., how do collectors record consumer
disputes)? How do technological advances affect collectors' ability to
ensure both that inaccurate information is removed from collectors'
databases and that information indicating that a consumer should not be
contacted is reflected in collectors' databases? To what extent is
information overwritten by collectors in using or transferring to
others the contents of databases, and what problems can this cause?
5. Do new information technologies create greater or different
privacy or data security risks in the context of debt collection than
traditional communication technologies? If so, what are the risks of
such technologies, and how are the risks different? What, if anything,
should collectors be required to do to prevent or mitigate these risks?
What do debt collectors do to keep information on consumers and debts
secure? How frequently do data breaches occur? What sorts of breaches
occur?
6. What technologies do creditors, debt buyers, and debt collectors
use in transferring information among themselves about alleged debtors
and debts? What information is transferred, and when and how is it
transferred? How has technology affected the availability of media
evidencing debt and the ability to store and transfer that material? To
what extent are there problems with systems being unable to interact
with each other?
7. What is the prevalence and feasibility of outsourcing the
transfer (and storage) of information to third-party firms that act as
repositories of information on consumer debts? What are the potential
costs and benefits to consumers, collectors, and creditors of such
repositories? What role should creditors play with respect to these
repositories? Should the Commission or other policymakers mandate or
encourage the use or creation of such repositories?
8. To what extent do advances in technology affect the process of
selling debts, the ease and speed of selling debts, and the quantity
and nature of the information conveyed when debts are sold? Are debt
sales negotiated or closed using social media sites or Internet
marketplaces? What is the significance, if any, of whether debts are
bought or sold via social media or the Internet? What would be the
costs and benefits to consumers of buying or selling debts through
these media?
9. How do current federal and state laws apply to debt collectors'
use of post-FDCPA information technologies? How, if at all, should the
law be changed to take into account the costs and benefits of these
technologies to consumers and collectors?
Communication Technologies
10. What are the costs and benefits to collectors and consumers of
using various methods to communicate with consumers? Are the costs and
benefits different for traditional communication technologies (e.g.,
letters and landline telephone calls) compared with new communication
technologies (e.g., social networking sites, e-mail, text messages,
etc.)?
11. Should debt collectors be required to obtain consumer consent
to use particular methods of communication to contact consumers? If so,
which communication methods and why? Should it depend on whether the
consumer provided the creditor or collector with the necessary contact
information? If consent should be required, what, if anything, should
collectors be required to do to obtain such consent? How likely are
consumers to provide such consent?
12. Do new communication technologies create any greater or
different privacy or data security risks in the context of debt
collection than traditional communication technologies? If so, which
communication methods create greater or different risks? What are the
risks of such methods, and how are the risks different? What, if
anything, should
[[Page 14013]]
collectors be required to do to prevent or mitigate these risks?
13. Do new communication technologies in the context of debt
collection create different risks of deception, unfairness, or abuse,
compared to those associated with traditional technologies? If so,
which technologies, and why?
14. What proportion of debt collectors' communications to consumers
proceed by various modalities (e.g., letters, e-mail messages, calls to
mobile phones, use of artificial or prerecorded voices, etc.)? Are
there variations by size of collection firm or type of debt subject to
collection? If so, what are the variations?
15. How do current Federal and State laws apply to debt collectors'
and consumers' use of post-FDCPA communication technologies? How, if at
all, should the law be changed to take into account the costs and
benefits of these technologies to collectors and consumers?
Payment Technologies
16. What proportion of consumer payments to debt collectors proceed
by various payment methods (e.g., paper checks, ACH debits, or online
credit card payment portals)? Are there variations by size of
collection firm or type of debt subject to collection? If so, how?
17. What are the costs and benefits to collectors and consumers of
accepting consumer payments using electronic payment technologies
(e.g., direct ACH debits, electronic checks, online payment portals) as
compared to traditional payment technologies (e.g., paper checks,
credit card payments)?
18. Does debt collector use of electronic payment technologies
create any greater or different privacy or data security risks in the
context of debt collection than in the general retail industry? If so,
which payment technologies create greater or different risks? What are
the risks of such methods, and how are the risks different? What, if
anything, should collectors be required to do to prevent or mitigate
these risks?
19. Do electronic payment technologies in the context of debt
collection create different risks of deception, unfairness, or abuse,
compared to those associated with traditional technologies? If so,
which technologies, and why?
20. How, if at all, should collectors be required to obtain and
document consumer consent to making a payment using various payment
technologies? Should requirements for collectors differ from
requirements for general retailers?
21. How do current federal and state laws apply to debt collectors'
use of post-FDCPA payment technologies? How, if at all, should the law
be changed to take into account the costs and benefits of these
technologies to consumers and collectors?
Instructions for Filing Comments
Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to ``Debt
Collection 2.0, Project No. P114802'' to facilitate the organization of
comments. Please note that your comment--including your name and your
state--will be placed on the public record of this proceeding,
including on the publicly accessible FTC Web site, http://www.ftc.gov/os/publiccomments.shtm. To be considered in preparation for the
workshop, comments must be received by April 7, 2011, although the
Commission will accept comments until May 27, 2011.
Because comments will be made public, they should not include any
sensitive personal information, such as any individual's Social
Security Number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. Comments also
should not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, comments should not include any ``[t]rade secret or any
commercial or financial information which is obtained from any person
and which is privileged or confidential * * *, '' as provided in
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2),
16 CFR 4.10(a)(2). Comments containing material for which confidential
treatment is requested must be filed in paper form, must be clearly
labeled ``Confidential,'' and must comply with FTC Rule 4.9(c), 16 CFR
4.9(c).\20\
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\20\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR
4.9(c).
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Because paper mail addressed to the FTC is subject to delay due to
heightened security screening, please consider submitting your comments
in electronic form. Comments filed in electronic form should be
submitted using the following Web link: https://ftcpublic.commentworks.com/ftc/debtcollecttechworkshop (and following
the instructions on the Web-based form). If this document appears at
http://www.regulations.gov/#!home, you may also file an electronic
comment through that Web site. The Commission will consider all timely
comments that regulations.gov forwards to it. You may also visit the
FTC Web site at http://www.ftc.gov to read this notice and the related
news release.
A comment filed in paper form should include the ``Debt Collection
2.0, Project No. P114802'' reference both in the text and on the
envelope, and should be mailed or delivered to the following address:
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex
F), 600 Pennsylvania Avenue, NW., Washington, DC 20580. The FTC is
requesting that any comment filed in paper form be sent by courier or
overnight service, if possible, because U.S. postal mail in the
Washington area and at the Commission is subject to delay due to
heightened security precautions.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. The Commission will consider all timely and responsive
public comments that it receives, whether filed in paper or electronic
form. Comments received will be available to the public on the FTC Web
site, to the extent practicable, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission makes
every effort to remove home contact information for individuals from
the public comments it receives before placing those comments on the
FTC Web site. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy at http://www.ftc.gov/ftc/privacy.shtm.
Requests To Participate as Workshop Panelists
The FTC staff will identify and invite individuals with relevant
expertise to participate as panelists. In addition, the FTC staff may
invite other persons to participate as panelists who submit requests in
response to this Federal Register notice.
Requests to participate as workshop panelists must be received in
writing by 5 p.m. EST on Tuesday, March 22, 2011, and should refer to
``Debt Collection 2.0--Panelist Participation Request.'' Such requests
(except requests containing any confidential material)
[[Page 14014]]
should be submitted in electronic form to [email protected] and should be
captioned: ADebt Collection 2.0--Panelist Participation Request.'' If
the request to participate contains any material for which confidential
treatment is requested, it must be filed in paper (rather than
electronic) form, and the first page of the document must be clearly
labeled ``Confidential.'' Please include an original and two copies of
each document submitted in paper form. Requests submitted in paper form
should include this reference both in the text and on the envelope, and
should be sent by overnight delivery or courier to the following
address: Debt Collection 2.0, c/o Leah Frazier, Federal Trade
Commission, 600 Pennsylvania Avenue, NW., Mail Stop 3158, Washington,
DC 20580.
Requests to participate as workshop panelists should include the
following information:
(1) A brief biographical description, r[eacute]sum[eacute], or
curriculum vitae, including name and affiliation;
(2) A statement setting forth the potential panelist's expertise in
or knowledge of one or more issues likely to be addressed by the
workshop;
(3) A list of the topic(s) that the potential panelist would like
to address, and a one-paragraph summary of the potential panelist's
unique perspective or knowledge of each such topic; and
(4) Contact information, including a daytime telephone number,
facsimile number, and e-mail address (if available).
Parties filing requests to participate as workshop panelists will
be notified whether they have been selected on or before Thursday,
March 31, 2011.
The FTC Act and other laws the Commission administers permit the
collection of requests to participate as workshop panelists to consider
and use in this proceeding as appropriate. More information, including
routine uses permitted by the Privacy Act, may be found in the FTC's
privacy policy at http://www.ftc.gov/ftc/privacy/htm.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2011-6002 Filed 3-14-11; 8:45 am]
BILLING CODE 6750-01-P