ISPs can still log browsing history even with VPNs
I use a VPN because I don't like the idea of people looking over my shoulder, and because I don't trust the future with my browsing history. Far from perfect but better than handing it on a plate to my ISP.
Recently I found that my VPN service was not performing as it has in the past - for example I could browse bbc.co.uk and iPlayer while logged in from Mexico. Much head-scratching as I am no network expert, however some googling suggested that my DNS requests might be being hijacked.
I recently upgraded my modem/router and discovered that I had not updated the DNS service in the router from BT's standard DNS ("Get from ISP") to OpenDNS or Google's service. After changing the DNS to Google, suddenly all was well again with my VPN service.
My take is that BT were hijacking my DNS requests, and serving up what they thought I should see. I ask for "bbc" and I get directed to the ".co.uk" website - even though my IP address is showing as Mexico City.
So, every web address I was entering was going through BT's DNS and may be logged "for training & quality purposes", or to be "anonymized" and flogged on at some future date. This made me unhappy.
I tested the theory by visiting one of the more popular torrent sites. Sure enough I got redirected to a message from the UK High Court. This made me very unhappy, as BT is censoring my internet connection.
From this experience I'd say that a VPN offers some protection, but does not necessarily prevent your ISP from logging the sites that you visit, or redirecting you as they see fit. DNS requests can be sent outside of your VPN tunnel, meaning your DNS provider is in control, and is watching where you go.
I changed my DNS to google's service and all was well again... for now anyway.