How do free VPNs make money?

a 'VPN' symbol with many blue connections heading towards it
(Image credit: Alexander Supertramp/Shutterstock)

A VPN (virtual private network) makes for a more secure and private internet connection by hiding your IP address and encrypting data sent to and from your computer. And, while there are some decent free VPN providers out there, it’s important to realize they’re still making money off you, and you may not like just how it’s done.

Many of the best VPN services like ExpressVPN enable you to avoid these issues for just a few bucks per month, so make sure you understand how no-fee VPNs make money using your data before signing up.

Restrictions and limitations

Many unpaid VPN solutions are actually ‘freemium’ software, meaning that you get a very limited set of features and capabilities compared to the full paid version. For VPNs, these limitations often take the form of caps on bandwidth and total monthly data.

Hotspot Shield, for example, offers one of the best free services out there, but still only allows 500MB of traffic per day. That much data doesn’t go very far these days: a few emails with attachments will use it up in no time.

Some providers, like Proton VPN, do actually offer unlimited data – but only two or three server locations are available, and speeds are throttled.

Unpaid VPN providers know that speed, server choice, and data use are what people most want from a VPN, so these are where they’re most likely to apply limitations.

  • If you've got a need for speed, check out the best fast VPNs

Logging your activity and selling your data

If you’re interested in using a VPN for increased privacy online, you should know that many no-fee VPN providers make use of tracking technology like cookies and may sell your online activity, along with your email address and other personal information, to third parties and advertisers.

Thus, while an unpaid VPN can help keep your activity hidden on a public network, it may have no qualms about selling it to the highest bidder. Read very carefully through the privacy policy of any free service before installing it.

This information can also be strong-armed out of even the most honest no-fee VPN providers by government agencies, both local and foreign. In terms of privacy, a paid-for VPN really is the way to go – they can afford to do away with your valuable data because you pay them a small monthly fee.

Typing on a computer with padlock icons superimposed

(Image credit: Shutterstock)

Using your computer as an exit node for paying users

With a standard VPN, a new IP address is assigned to you after connecting to the server so that your online activity is kept both private and secure.

However, some VPN providers use the computers of non-paying users as exit nodes, routing internet traffic through your personal connection. As a result, your ISP (and anybody else who’s watching) sees somebody else’s traffic as if it were your own.

If that gives you pause, it’s fully justified – not everybody uses VPNs for legal purposes. If you don’t want your name and ISP account associated with illegal online activity, a free service probably isn’t for you.

Making you deal with intrusive ads

Advertising plays a double role when it comes to unpaid VPNs. Of course, the main purpose is to show you a product or service in hopes that you’ll buy it. Displaying ads for other companies is one of the ways unpaid VPN providers make money. 

However, no-fee VPNs have been known to make advertising intrusive and unavoidable to encourage users to upgrade to the paid version. As a result, ads are often timed and unclosable, or must be played to the end before accessing the VPN.

It’s not the end of the world, but considering that Surfshark, a fully-featured and fast VPN, costs around $2 per month, it’s an inconvenience that can be cheaply removed.

Bottom line

If you only need a free service to occasionally check email and browse online over public WiFi, and you don’t mind slow internet speeds or the fact that the VPN provider may be logging and selling your information, there are some decent no-fee VPNs out there.

Just remember that many of the best, feature-rich, blazing-fast VPNs with thousands of servers worldwide and strict no-logging policies cost just a few bucks per month, and we’d make that invested every time.

If you're after a fully functioning paid service, look no further than ExpressVPN15 months for the price of 12

If you're after a fully functioning paid service, look no further than ExpressVPN. With over 3,000 server worldwide and great speeds to match, it's a super secure solution to keep your personal info private. You'll have 30 days to test and claim your money back, plus Tom's Guide readers can claim three free months, meaning you'll get 15 months for the price of 12.

Christian Rigg

Christian is a freelance writer and content project manager with over six years' experience writing and leading teams in finance and technology for some of the world's largest online publishers, including TechRadar and Tom's Guide.