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In addition to cookies, which are largely invisible to consumers, other hidden methods of monitoring consumers' activities on the Web may also be used. One such method is through the use of "Web bugs," also known as "clear GIFs" or "1-by-1 GIFs." Web bugs are tiny graphic image files embedded in a Web page, generally the same color as the background on which they are displayed. They are one pixel in height by one pixel in length - the smallest image capable of being displayed on a monitor - and are invisible to the naked eye. The Web bug sends back to its home server (which can belong to the host site, a network advertiser or some other third party): the IP (Internet Protocol) address of the computer that downloaded the page on which the bug appears; the URL (Uniform Resource Locator) of the page on which the Web bug appears; the URL of the Web bug image; the time the page containing the Web bug was viewed; the type of browser that fetched the Web bug; and the identification number of any cookie on the consumer's computer previously placed by that server. Web bugs can be detected only by looking at the source code of a Web page and searching in the code for 1-by-1 IMG tags that load images from a server different than the rest of the Web page. At least one expert claims that, in addition to disclosing who visits the particular Web page or reads the particular email in which the bug has been placed, in some circumstances, Web bugs can also be used to place a cookie on a computer or to synchronize a particular email address with a cookie identification number, making an otherwise anonymous profile personally identifiable.

Cookies are used for many purposes other than profiling by third-party advertisers, many of which significantly benefit consumers. For example, Web sites often ask for user names and passwords when purchases are made or before certain kinds of content are provided. Cookies can store these names and passwords so that consumers do not need to sign in each time they visit the site. In addition, many sites allow consumers to set items aside in an electronic shopping cart while they decide whether or not to purchase them; cookies allow a Web site to remember what is in a consumer's shopping cart from prior visits. Cookies also can be used by Web sites to offer personalized home pages or other customized content with local news and weather, favorite stock quotes, and other material of interest to individual consumers. Individual online merchants can use cookies to track consumers' purchases in order to offer recommendations about new products or sales that may be of interest to their established customers. Finally, by enabling businesses to monitor traffic on their Web sites, cookies allow businesses to constantly revise the design and layout of their sites to make them more interesting and efficient. The privacy issues raised by these uses of cookies are beyond the scope of this report.

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