Students at prestigious UK universities are being recruited to promote betting apps on campus and, in some cases, are handing out free cash to entice others to gamble.

An investigation by the Observer has found that students are being headhunted by marketing agencies that claim they are working on behalf of betting companies.

At the University of Manchester, student promoters encouraged peers to take advantage of “free bets” on two gambling apps, Kwiff and BetBull, by handing out £5 notes around campus and other meeting places.

Critics have condemned the marketing agencies for the “unscrupulous” ploy of targeting impressionable young people, and the National Union of Students raised concerns over the “deplorable tactics”. The makers of the apps, who contract the marketing agencies to promote their products, have denied any involvement in, or knowledge of, the scheme.

Students can reportedly earn up to £12 for every person they sign up. Recruitment is often done by sharing links on social media but some students employ face-to-face marketing.

One undergraduate, who didn’t want to be named, claimed that a student promoter even helped her choose good odds and bought her a drink in exchange for signing up to a betting site. She said she had been given gifts by student promoters: “They were [giving out £5 notes] for your first bet and a drink to sign up [to the betting sites]; it was such a good offer I couldn’t say no.”

It is unclear if handing out cash or gifts is encouraged by the marketing agencies, or if some students have taken the matter into their own hands, but one student promoter said they were given little guidance on accepting the job. The undergraduate said: “The goal is to get people to download the app and make a bet... it’s pretty much up to us.”

Students in Birmingham, Newcastle, Nottingham and Sheffield have also been hired as “brand ambassadors” for football tipsters, but there is no evidence of them handing out cash to peers. The NUS, which represents the bulk of students in higher education, has expressed concern over the revelations. Vice-president Eva Crossan Jory said: “[It is shocking] to hear that marketing agencies are recruiting students and using such deplorable tactics [on] vulnerable students, who may not understand the full implications of gambling.”

Matt Zarb-Cousin, a co-founder of Gamban software, which blocks access to gambling sites and apps, added: “This is pretty unscrupulous behaviour from operators, given the younger you start gambling, the more likely you are to get addicted. Students are particularly vulnerable [as] it is the first time they have access to credit, overdrafts and loans – and plenty of time on their hands.”

Kwiff, which markets itself as a “supercharged sports betting app”, said it was unaware that marketing affiliates claiming to work on its behalf were on university campuses at all. “It [recruiting students on campus] is not a marketing method we would support or encourage.”

It also denied any knowledge of marketing companies handing out gifts on its behalf. “This would be considered a breach of contract and would lead to immediate termination of an affiliate contract.”

BetBull said that the flyer with its logo on being given out at universities was unauthorised. “Nobody at BetBull was aware of, or sanctioned, its production or distribution. Betbull does not tolerate or condone this practice – we take our marketing compliance obligations extremely seriously and ensure that our marketing affiliates are fully and regularly trained on these compliance requirements. We take all available measures to prevent misuse of our branding and have launched a full investigation into this matter.”

The NUS commissioned a report into students and gambling at the end of last year and found that some undergraduates were gambling their student loan to afford increased living costs.

The University of Manchester declined to comment other than saying it hadn’t had anything to do with the gambling app jobs.