From the May 2001 issue of Entrepreneur

Web bugs. You can't see them, but they exist on many Web pages across the Net. The nonprofit Privacy Foundation gives this definition: A Web bug is "a graphic on a Web page or in an e-mail message that is designed to monitor who is reading the Web page or e-mail message. A Web bug is often invisible because [it is] typically only 1-by-1 pixel in size, with no color."

For Web site operators, Web bugs represent a subtle way to gather data on visitors, such as the number of page visits, browser usage, effectiveness of mass e-mails and even personal information. Privacy advocates are particularly concerned about the ability of Web bugs to communicate with cookies and potentially link records of online behavior to personal profiles.

Those who choose to use these digital insects need to be aware of public privacy concerns and the possibility of consumer backlash. Last year, the White House issued restrictions on the use of cookies in government Web pages. Several class-action lawsuits have been brought against online marketing companies over their use of cookies and Web bugs. Last year, under lawsuit pressure, Toysrus.com backed away from using Web bugs.

It's probably a good idea to take steps now to avoid such legal pains later. The Privacy Foundation has issued guidelines for the usage of Web bugs. Two of the main tenets are "A Web bug should be a visible icon on the screen" and "Users should be able to 'opt out' from any data collection done by Web bugs." Clicking on a Web bug should give information on what data is being collected and instructions for opting out. Those who follow these guidelines will still have the use of Web bugs while avoiding the appearance of privacy violations or impropriety.