Four ways that a free VPN can profit from its users

Four ways that a free VPN can profit from its users
Image Credit: Pixabay

VPNs can be divided into two types: free VPN services and paid. Running a VPN service requires considerable investment in all manner of elements, including a good website, client software for a variety of platforms, many servers in multiple locations with plenty of bandwidth, and a customer support team to keep all this working throughout the entire world.

Better quality paid VPN providers make this considerable and ongoing investment to offer a robust VPN service which has strong throughput, with unlimited data allowance, and excellent customer support – all for a reasonable monthly subscription fee.

On the other hand, a free VPN can easily find itself in a tight spot right from the start. Without the crucial benefit of a paid subscriber base, the obvious question is: how does the provider pay to keep a decent quality service afloat?

Let’s delve into this issue, and take a look at how a free VPN can make some money to keep its operation running – although as we’ll see, too often this can be at the user’s expense.

1. The ‘gateway’ VPN

In some cases, such as Windscribe or Tunnelbear, the free VPN service that is offered is piggybacked onto the infrastructure of the firm’s paid VPN offering. The hope is that a free user will get to experience the VPN first-hand, and be converted to a paid subscriber of the premium service once they realize the value proposition. This type of VPN service sometimes gets dubbed ‘freemium.’

This sort of makes a freemium VPN tier a kind of ‘gateway’ VPN, not unlike when infant formula is handed out to new mothers while in hospital after the delivery of their new-born, a practice known to discourage breastfeeding.

Still, we can’t seriously fault the VPN providers for having a free VPN tier as a recurring trial for users, trying to bring them into their revenue fold as they blow through the monthly data allowance every month. However, this practice can’t be all that profitable, as plenty of popular VPNs do not offer any free tier.

For many users, online privacy is the entire point of using a VPN (Image Credit: Pixabay)

For many users, online privacy is the entire point of using a VPN (Image Credit: Pixabay)

(Image: © Pixabay)

2. Kicking privacy to the curb

A primary reason for using a VPN is to regain control of your online privacy. After all, once it leaves your computer and goes onto the internet, your data is available for your ISP to access as it transmits the information along to its intended destination. This whole issue came to the forefront back in 2017 when the FCC’s privacy regulations that govern the ISPs were overturned, thereby giving clearance to your ISP to collect and sell your data. Not surprisingly, what followed was a large surge in VPN subscriptions as users attempted to re-establish and protect their privacy online.

What we have to bear in mind, though, is that while using a VPN means that your ISP won’t be able to access your internet traffic, the VPN provider will instead. And that’s precisely why informed buyers look for a VPN with a fully disclosed privacy policy, based in a country with established legal privacy protections such as Switzerland or Romania.

However, going with a free VPN does not afford this same level of privacy. A free VPN can potentially collect all kinds of data on you, including your email, location, cell phone number, and browsing data. This data can then be sold to the highest bidder, which uses it for targeted advertising.

Users of free VPNs certainly have to bear in mind that their data could be potentially used for profit in one way or another, including selling it to affiliate advertisers.

HolaVPN has been at the center of some controversy to say the least (Image Credit: HolaVPN)

HolaVPN has been at the center of some controversy to say the least (Image Credit: HolaVPN)

3. Share and share alike

You pay good money for your connection to the internet, whether that’s your fixed broadband connection, or mobile data plan. At the very least, you would not want to share the bandwidth you pay for, and indeed if that was to happen, you could potentially be liable for another user’s illicit online activities.

Yet with one free VPN provider, HolaVPN, this is exactly what happened. HolaVPN doesn’t have its own network of servers, but effectively crowdsources, with everyone using the service providing them bandwidth – not only for the free HolaVPN offering, but also for a related paid product known as Luminati. In addition, your device could become the exit node for another user’s activity, making you potentially liable for their actions.

As we reported at the end of last year: “The bandwidth of HolaVPN users is being sold via Luminati and their machines could end up becoming part of a botnet facilitated by the network. Cybercriminals could take advantage of this access to a user’s system to perform various illegal or unauthorized activities on their machines.”

4. Billboards on the superhighway

A traditional way to make money online is with advertising, and the more targeted these ads are, the better. Certainly this has been a profitable business for the likes of Google.

With a user’s browsing going through a VPN, this can quickly become a treasure trove of information for the provider, and just as with Google, this can be used to target ads at the user. In fact, this is an all too common practice that again is the antithesis of the privacy desired when using a VPN. The user is being tracked and logged, with the free VPN provider intending to profit from this.