How Do Free VPNs Make Money? Dark Facts about Free VPN Services in 2021

by
Frederik Lipfert
Dr. Frederik Lipfert Founder, vpncheck
Updated on 24 Nov 2021

How Do Free VPNs Make Money? Dark Facts about Free VPN Services in 2021

A Virtual Private Network (VPN) is an easy way to unblock restricted websites that may be blocked in a certain part of the world. It is an easy way to quickly access the sites you want. Most people use it because it is usually free and works without any registration requirements.

A VPN does require money to pay for its server costs. To achieve this, the companies set paid memberships, and part of the revenue will cover those expenses. But what about the free ones? The truth is nothing in this world comes for free, and there are other ways that free VPN services make money. Below are some of the facts that might make you reconsider before using a free version.

ExpressVPN connected

Marketing Purposes

The VPN firstly collects your information and stores it in separate folders with your name. They also make categories of the users so that they can sell the right data to their clients.

After gathering the users’ personal information, including their eating habits, daily routine, call logs, call records, and even most private information such as pictures and messages, they sell all of these to marketing companies.

It is very common for these free VPNs to trick you into watching unwanted advertisements. Some of them are even a minute long, and you can’t skip them. This creates frustration since you can not enjoy your browsing experience in peace. As if these advertisements were not enough, pop-ups are a real hassle, especially when they appear on the whole page all of a sudden. To add insult to injury, many of these ads are NSFW, which also might cause you embarrassment in front of others.

These marketing companies will then use this data to bombard you with advertisements. For example, if you are using a free VPN while also searching for the juiciest beef burger, then the free VPN would use this information, and you will start seeing burger ads on your browser. We call this the direct way of marketing.

The second method, which is usually a rather dangerous one, is that they sell your info to third-party companies for marketing purposes. You won’t even have a clue which companies they are. So in this way, they disclose your information not only to the VPN but also to numerous other marketing agencies. These firms will then spam you with text messages, emails, and other advertising tools on social media.

An example of a free VPN that uses your data to sell to marketers is Betternet. This company openly tells you that they use your information and sell it to third parties. However, they never go into details because then you might not use their services as you will discover what it takes when you use a so-called free VPN.

Selling Private Information

To make money, VPN companies sell users’ private information, including names, pictures, phone contacts, and other details that would make you think twice before sharing with anyone.

The reason why they accomplish it easily is that they always put their terms and conditions in a way that most users tend to ignore. Had they known any better, they would have purchased a premium VPN service.

These companies not only sell your personal information to marketing agencies but also offer it to other organizations, which might include research institutions. Some of them are interested in knowing the statistics of the average internet usage of users from different locations. Also, mobile phone giants can use the data to see the market share of other mobile phone brands. Even intelligence agencies from a rival country may use them.

They sell the info for different prices, depending on the quality of data being sold to third parties. Now that you’ve learned how free VPNs cover their expenses, would you still use them?

Using your ID as a Mask for Others

As if all of the above-mentioned unscrupulous activities were not enough, one of the scariest parts of using a free VPN is the botnet and exit nodes. A botnet is a combined network of devices that are using free VPN services. The hackers then use this network for their purposes, including sending malware and ransomware to other devices.

If a company takes action against the hackers, it will most likely be that the VPN users will get involved unwillingly. This, unfortunately, happened to Hola VPN users.

An exit node is a protocol in which all of the masked searches, history, and other information go through a route using another user’s IP. The identity of the people who are using the VPN can be detected. Usually, they use this method to protect the privacy of paid VPN users at the cost of free users. So the user at the exit node will be held responsible for any banned activity rather than the actual user behind it.

Vpnmentors did an investigative study about seven free VPN services and found out that these sites stored 1.2 terabytes of user data. They lied to their users, saying that they encrypted their data. But it wasn’t true.

All of these data contained sensitive information such as call records, home addresses, text messages, and so on.

Aiding the Paid VPN Users at the Cost of Free Ones

Another issue you may face while using a free VPN is that, basically, your device can become a host for the paid members of the VPN. The service providers give extra speed to the paid members for their browsing capabilities, and they achieve this by leeching the processing speed from free users. You can understand this if you have ever used a torrent to download any file. There are seeds for a file, which determines how fast you can download the file. There is also a leeches tab indicating how many users will consume your bandwidth to download the same file. This information is available in case of torrents but not when you use the free VPN. They won’t tell you that they will use your device to power the paid members.

Another fact to notice is that a free VPN will not give you full access to features such as torrent downloads. Some of them will even cut off your free use in the middle to push you into buying the paid version. The choice of multiple servers will also not be available in the free ones, along with per-day data limitations.

Activity Tracking

VPN providers will not tell you, but they do store your activity logs in the name of creating a faster and smoother experience. Just like browsers like Chrome that save cookies for a smoother experience, VPN providers just do the same, and they keep it not only just to provide you a better experience but also to sell this data to interested parties.

VPN providers gather information through different methods, and the most common ones are web beacons or tracking pixels. A web beacon is a picture that is small in size, usually the size of one pixel and hence the other name tracking pixel, that the company uses to track user activity. The service providers send it through a website or by email, and it works as a tag for the user. As soon as someone reads the tracked email or visits the site, this web beacon records the activity.

Such particular information about users is very valuable as it helps predict individual browsing and activity behavior. Scientists usually use such data to create breakthrough technologies. However, you can justify this if the information is available to the users earlier. Secondly, different sorts of government agencies might also get ahold of your personal information if the VPN provider of that country is obliged to do so by the law. So a better option is to go for a paid version, where they at least inform you about which information they will be using for the services.

Do Free VPN Providers Need to Trick People?

While it’s true that VPN providers do need money to run their show, how much earning is justified? Is their way of earning a legal one? Free VPN companies have time and time again betrayed the trust of innocent users who are just attracted by the “free tag.” Marketing-based earnings can be justified to an extent. But sharing the intimate details of a person like pictures, messages, and voice call recordings to people unknown to the user is going overboard. 

Below are some of the most common reasons behind the deception by these unscrupulous VPN providers:

Greed

Many businesses nowadays are too profit-focused. They do not care about the well-being and security of people. The same applies to free VPN providers. They do earn a hefty profit that is more than enough to run their business. The data-selling industry has become an organized business in the guise of offering seemingly legitimate services. Such VPN providers have simply fallen for the money. They simply know no bounds.

Financial Gain

Every business has the right to earn, and that is the reason why many apps and sites have not banned free VPNs as they put forward their legal disclaimer to which the individual user agrees. And they present it in such a way that readers won’t bother reading and understanding them. Therefore, seeking financial gain is justified when it is done in the right way only.

Infrastructure Expenses

The server rooms, racks, routers, switches, air conditioning, and all other hardware and software require a handsome amount of money, especially at the start. This cost also increases with time as VPN providers need more traffic and data to process and buy new servers. These costs, along with other business expenses, rack up to thousands (if not millions) of dollars. Therefore, free businesses get their hands dirty to cover these costs.

The Need for a Paid VPN – A True VPN

There is no doubt that if someone is tracking you or a site or app is bombarding you with advertisements, then you are not getting any privacy at all. You are unwittingly sharing your sensitive information with different businesses around the globe as a free user. A paid version is still the best way to go, even if it costs you money. It includes premium services, which are given below:

Better Security

With paid VPN services, you will get professional-level security, and the VPN provider will make sure that you and your data are safe and secure throughout your browsing session, no matter which site you go to. Kill switch, split tunneling, and P2P connections are extra features to enhance data security during VPN browsing.

Fast Speed

As mentioned earlier, the free version actually uses some of your internet speed to feed off others. Whereas with a paid version, you will get faster speeds, so you can stream and surf your content without any hiccups. Therefore, professionals, especially those who need to stream videos and run applications that require high data usage along with a fast connection, should always opt for a paid service.

Vast Server Options

As a paid member, you will get a variety of different servers through which you can access your content. This greatly helps many people, especially journalists, because some sites are blocked in some countries based on a specific geographical location. For example, if you cannot access a French website from the US, then you can use the server options for different countries, enabling you to bypass regional restrictions.

Vivid Policy Statements

In a paid version, the service provider will not shy away from providing you with any information and will present you with complete agreement terms that will be easy to read and understand so that you know what you are paying for.

After Sales Support

If there is any issue with your service or you need any help to view any content, then you can simply contact customer support. They will support and guide you in a way that you can simply solve your queries effectively. This is especially useful if you are not tech-smart and you want easy solutions delivered to you by humans.

Additional Features

Some of the paid services will also provide you with additional options, including a P2P connection, multiple device access through a single ID, and virus detection tools. Other features include an extension that will encrypt every data you browse even if the website does not encrypt it for you.

Our Top Picks for The Best Paid VPNs in 2021

There are a lot of wonderful VPNs, each with its unique set of features. You must study your options before purchasing to ensure that your needs are satisfied. Below are the top four picks for the best paid VPNs.

ExpressVPN – Best Overall VPN

ExpressVPN Logo

Express VPN has hundreds of servers scattered throughout different locations across the globe so that the user’s browsing speed remains optimal. Their software also has a catchy design.

Highlights

  • Server locations in more than 150+ countries
  • Can unblock famous streaming sites, including Netflix
  • Excellent customer support
  • Can support five devices simultaneously
  • Kill switch & split tunneling features available
  • Their server works the fastest in the UK.

NordVPN – Best Alternative VPN

NordVPN’s Logo Post-2019

Nord VPN boasts the highest number of servers, with a record of 5,200 servers spread across sixty countries. It also offers its services for a very low price of 4.92 dollars per month for a yearly subscription, making it the preferred choice of those looking for a budget buy with all the advanced VPN features.

Highlights

  • The highest number of servers
  • AES-256 military-grade encryption
  • Kill Switch that’s customizable
  • Cyber Sec feature blocks unwanted and malicious ads
  • It works in the most restricted countries
  • P2P encryption is available

IPVanish – Best for Downloads

ipvanish-full-logo

IPVanish is famous for its unique feature for downloading bulky files. This is very useful, especially if you often need to work offline. IP Vanish has servers in many locations to boost your speed and has an interface that offers advanced features. You can also store up to 250 GB of data on the cloud.

Highlights

  • P2P Connection is available
  • Comparatively cheaper than ExpressVPN
  • It keeps no logs
  • 30-day money-back guarantee
  • Their application is lightweight and consumes less space.
  • You can connect as many devices as you want.

Conclusion

Free VPN services seem to be very exciting at first, but many do not realize that using them can be very risky. The hackers can get access to your private information, including pictures, messages, and even banking information. Moreover, free VPN services are not really private as they only unblock the content, but in return, they always take much more. Therefore, you should always go for a paid version of a VPN. Yes, it will cost a few bucks, but in the long run, your data will be safe, and you will enjoy using a seamless service!