The QED processes e+e-→e+e -μ+μ- and e+e -→e+e-τ+τ- are studied with the L3 detector at LEP using an untagged data sample collected at centre-of-mass energies 161 GeV≤√s≤209 GeV. The τ-pairs are observed through the associated decay of one τ into eνν and the other into ππν. The cross sections are measured as a function of √s. For muon pairs, the cross section of the γγ→μ +μ- process is also measured as a function of the two-photon centre-of-mass energy for 3 GeV≤Wγγ≤40 GeV. Good agreement is found between these measurements and the O(α 4) QED expectations. In addition, limits on the anomalous magnetic and electric dipole moments of the τ lepton are extracted. © 2004 Published by Elsevier B.V.