Diploma Mills: A Legal Overview

CRS Report for Congress
Diploma Mills:
A Legal Overview
Updated March 3, 2006
Jody Feder
Legislative Attorney
American Law Division

Congressional Research Service ˜ The Library of Congress

Diploma Mills: A Legal Overview
This report provides an analysis of state and federal laws regarding diploma
mills, which offer students academic degrees for little or no meaningful academic
work. Specifically, this report addresses the criminal, civil, and common law
ramifications for both the manufacturers and distributors of phony degrees, as well
as for the buyers and users of such degrees. This analysis does not address counterfeit
degrees that purport to be from existing accredited universities, but rather focuses
primarily on the legal issues surrounding phony degrees from entities that provide
diplomas without requiring an appropriate level of academic achievement.

I. Introduction.....................................................1
II. Federal Oversight of Diploma Mills.................................2
Use of Diploma Mill Degrees in Federal Employment.................7
III. State Oversight of Diploma Mills.................................11
IV. Common Law Tort Actions Against Diploma Mills...................14
V. Enforcement..................................................14

Diploma Mills: A Legal Overview
I. Introduction
This report provides an analysis of state and federal laws regarding diploma
mills, which offer students academic degrees for little or no meaningful academic
work. Specifically, this report addresses the criminal, civil, and common law
ramifications for both the manufacturers and distributors of phony degrees, as well
as for the buyers and users of such degrees. This analysis does not address counterfeit
degrees that purport to be from existing accredited universities, but rather focuses
primarily on the legal issues surrounding phony degrees from entities that provide
diplomas without requiring an appropriate level of academic achievement.
Although no formal legal definition exists, a diploma mill is generally regarded
as an entity that lacks accreditation from a state or professional accreditation
organization, but that nonetheless sells college and graduate degrees that are
fraudulent or worthless because of the lack of standards imposed on the purchasers
of such degrees. While experts estimate that diploma mills have existed for hundreds
of years,1 such entities have proliferated in recent decades due to lax law enforcement
and technological advances such as the rise of the Internet. By some estimates, there
are several hundred diploma mills operating at any given time,2 with revenue in3
excess of $500 million per year.
Because many diploma mills use the Internet to operate their phony institutions
of higher education, it is sometimes difficult to distinguish between purveyors of
phony degrees and legitimate online institutions that operate traditional distance
learning degree programs. This difficulty is one reason that federal and state policy
makers have trouble drafting laws that can be used to shut down phony institutions.
Nevertheless, most diploma mills display some or all of the following hallmarks of
a fraudulent operation: (1) they are unaccredited or they claim to be accredited but
the organization that they cite is not one of the legitimate accrediting agencies
recognized by the Council on Higher Education Accreditation or the United States
Department of Education (ED); (2) they do not require previous academic records,
such as grade point average or test scores, for admission; (3) they charge tuition
based on the number of degrees purchased rather than the number of credit hours or

1John B. Bear and Mariah Bear, Degree Mills, March 10, 2002,
[http://www.quackwatch.org/ 04Cons umerEducation/dm0.html ].
2Beverly Geber, Diploma Mills in the Cyber Age, TRAINING, June 1, 1999.
3Thomas Bartlett and Scott Smallwood, Inside the Multimillion-Dollar World of Diploma
Mills, The Chronicle of Higher Education (June 25, 2004), at 8. The June 25, 2004 edition
of The Chronicle of Higher Education provided an in-depth series of articles about diploma

courses taken; (4) they offer many or all degree credits based on a student’s life
experience; (5) they guarantee that students will receive diplomas in far less time
than it would take at a traditional university; (6) their professors often have degrees
from unaccredited universities and have little or no contact with students; (7) they are
located in a foreign country or have addresses that are post office box numbers; and
(8) they have names that are strikingly similar to legitimate, accredited universities.4
Diploma mills pose dangers to consumers and employers, as well as the general
public and to legitimate institutions of higher education. Although some individuals
who obtain degrees from diploma mills are active conspirators in fraud, others are
innocent victims of financial scams in which they pay hundreds or thousands of
dollars for worthless degrees. If the fraudulent credentials are discovered, such
individuals may lose their jobs or face civil or criminal charges. Regardless of
whether such individuals have fraudulent intent, employers who hire individuals with
fake degrees may, at best, have inadequately trained employees and, at worst, expose
themselves to liability for the mistakes of such employees. Finally, diploma mills
may harm members of the general public who receive professional services from
individuals with fake academic credentials, and they may damage the reputation of
legitimate degree-granting institutions.5
Despite the potential harm caused by diploma mills, state and federal efforts to
shut down these entities have been somewhat erratic over the years, depending in part
on the jurisdiction and enforcement priorities involved. For example, enforcement
has been weak at times for reasons that range from the difficulty in distinguishing
between fraudulent and legitimate institutions to the ability of diploma mills to move
jurisdictions quickly if authorities in one state begin an aggressive enforcement
campaign. Further complicating matters is the fact that every state has its own
diploma mill laws, which vary in strength and effectiveness. Meanwhile, the federal
government pursues enforcement actions against diploma mills under a separate set
of laws. These federal and state laws regarding diploma mills are discussed in detail
II. Federal Oversight of Diploma Mills
In general, the regulation of education in the United States is a state
responsibility. Nevertheless, the federal government plays a role in education
oversight, and diploma mills are no exception. Although federal law does not
explicitly prohibit diploma mills, the sale of fraudulent academic credentials is
punishable under several federal statutes relating to mail fraud, wire fraud, and
conspiracy, and at least five different governmental agencies have some direct
involvement in or authority over the legal issues raised by diploma mills, namely the

4Better Business Bureau, Is the Internet Becoming a Haven for Diploma Mills?, July 12,

2000, [http://www.bbb.org/alerts/article.asp?ID=185; geteducated.com], Consumer Alert:

Top Ten Signs You Might Be Dealing With A Distance Learning Degree Mill, 2003,
[http://www.ge teducated.c om/articles/degr eemills.htm] .
5John Bear, Diploma Mills: The $200-Million-a-Year Competitor You Didn’t Know You
Had, March 10, 2002, [http://www.quackwatch.org/04ConsumerEducation/dm1.html].

Federal Bureau of Investigation (FBI), which is housed within the Department of
Justice (DOJ); the U.S. Postal Inspection Service; the Federal Trade Commission
(FTC); the Department of Education; and the Department of Homeland Security
(DHS).6 In addition, where tax fraud is involved, the Internal Revenue Service (IRS)
has been known to participate in prosecutions of diploma mill operators, and
attorneys with a separate division of DOJ prosecute cases involving fraud against the
federal government. Finally, the Office of Personnel Management (OPM) has
personnel rules that prohibit applicants and employees from making
misrepresentations to federal agencies. Each of these agencies, and the relevant laws
and regulations, are discussed in detail in this section.
The two agencies with the greatest degree of legal authority to regulate and
prosecute diploma mills are the FBI and the U.S. Postal Inspection Service. Both
agencies have the authority to investigate crimes involving mail fraud, wire fraud,
and other types of fraud,7 and diploma mills are often prosecuted under these statutes
if they use the mail or telephone wire to commit fraud. Under the federal mail fraud
statute, use of the mail with intent to commit fraud is punishable both civilly and/or
criminally, respectively, by a fine and/or by up to twenty years in prison.8 Use of a
fictitious name or address in connection with mail fraud or any other unlawful
purpose is punishable by monetary fines and/or up to five years in prison.9 Likewise,
violations of the wire fraud statute are punishable with fines and/or up to twenty
years in prison.10 In addition, any attempt or conspiracy to commit the types of fraud
described above is subject to the same penalties that would have applied if the
underlying crime had successfully been committed.11 If an individual is violating or
about to violate these anti-fraud provisions, DOJ can seek an injunction in federal
court to prevent such violations.12 Finally, the Post Office is authorized to take certain
preventative actions if an individual conducts “a scheme or device for obtaining
money or property through the mail by means of false representations.”13

(American Council on Education and Macmillan Publishing Company 1988). The authors
also identify the Department of State as a federal agency that may have responsibilities
concerning diploma mills because of the number of inquiries that they receive regarding
questionable institutions located in the United States and overseas, but they identify no legal
basis for such a conclusion, and the Department of State does not appear to exercise
regulatory authority over diploma mills. Id. at 159. The State Department does, however,
provide information on its website about diploma mill and accreditation issues that may be
relevant to foreign students who are seeking to study in the U.S.
7Id. at 157.
818 U.S.C. § 1341.
9Id. at § 1342.
10Id. at § 1343. Limits on all the above fines are set forth at 18 U.S.C. § 3571.
11Id. at § 1349.
12Id. at § 1345.
1339 U.S.C. § 3005.

Over the years, federal enforcement of laws against diploma mills has waxed
and waned. For example, the FBI and the Postal Inspection Service have periodically
engaged in collaborative criminal investigations of diploma mills. Indeed, these
investigations were particularly active from the late 1970s to the early 1990s, when
the FBI spearheaded the DipScam operation. Short for diploma scam, DipScam
consisted of an FBI task force whose successful investigations of diploma mills led
to multiple arrests and convictions under federal anti-fraud statutes and to a decline
in phony institutions. Ultimately, the DipScam task force disbanded shortly after the
retirement of its top diploma mill expert, and phony institutions have made a
comeback in the years since.14 Investigations and prosecutions of diploma mills also
appear to have declined in recent years as federal agencies have focused enforcement
efforts on other priorities. For example, since the events of September 11, 2001,
combating terrorism has been the FBI’s top priority, while the Postal Inspection
Service has aggressively targeted the issue of identity theft in recent years.
The FTC is another federal agency with some regulatory authority over diploma
mills. Under the Federal Trade Commission Act, the FTC is authorized to enforce
consumer protection laws that prohibit fraud, deception, and unfair business
practices.15 As defined by the statute, unlawful deceptive trade practices include false
and misleading advertising.16 With respect to vocational and distance learning
schools, the FTC has interpreted the ban on false and misleading advertising to
prohibit such schools from using deceptive trade or business names, misrepresenting
the extent or nature of accreditation or approval, or issuing deceptive diplomas,
degrees, or certificates.17 Specifically, FTC guidance notes that
(a) It is deceptive for an industry member to issue a degree, diploma,
certificate of completion, or any similar document, that misrepresents, directly
or indirectly, the subject matter, substance, or content of the course of study or
any other material fact concerning the course for which it was awarded or the
accomplishments of the student to whom it was awarded.
(b) It is deceptive for an industry member to offer or confer an academic,
professional, or occupational degree, if the award of such degree has not been
authorized by the appropriate State educational agency or approved by a
nationally recognized accrediting agency, unless it clearly and conspicuously
discloses, in all advertising and promotional materials that contain a reference
to such degree, that its award has not been authorized or approved by such an18
For false or misleading advertisements made with intent to defraud or mislead,
penalties for a first offense consist of a fine of up to $5,000 or imprisonment for up
to six months, or both. Penalties for a second offense consist of a fine of up to

14Bear, supra note 1.
1515 U.S.C. § 45.
16Id. at § 52.
17Guides for Private Vocational and Distance Education Schools, 63 FR 42570, 42573-74
(Aug. 10, 1998).
18Id. at 42574.

$100,000 or imprisonment for up to one year, or both.19 Unlike the FBI or Postal
Inspection Service, the FTC is also authorized to sue individuals or companies that
violate the trade statute in order to seek legal redress for injuries to consumers.20
Thus, the FTC may sue diploma mills in order to secure refunds or damages for
consumers who have been deceived by phony degree-granting institutions. In
addition, the FTC is authorized to seek injunctions in federal court to prevent false
and misleading advertising.21 Despite this extensive authority, the FTC does not
appear to have pursued many enforcement actions against diploma mills.22
ED is another agency with some involvement in the issue of diploma mills.
Although ED is responsible for overseeing federal education efforts, the agency does
not have any statutory authority to accredit colleges and universities. Rather, for
purposes of identifying institutions that are eligible to receive federal student
financial aid, the Higher Education Act (HEA) authorizes ED to recognize
independent accrediting agencies that meet certain criteria. These accrediting
agencies, in turn, verify the legitimacy of institutions of higher education.23 Because
ED’s regulatory authority is limited to overseeing entities that receive federal funding
under statutes that provide federal financial assistance for education activities, the
agency “has no oversight or regulatory authority over institutions that do not
participate in the programs included in the HEA. Thus, we have no independent
authority or ability to determine if such a school is a diploma mill.”24 Furthermore,
although ED recognizes legitimate accrediting agencies, some diploma mills falsely
claim that they are accredited, but the accrediting agency that they cite is not
recognized by ED or by the Council for Higher Education Accreditation, which is a
private organization that also recognizes accrediting agencies. ED, however, does not
have the authority to recognize these fake accreditation agencies.
ED also lacks regulatory jurisdiction over foreign accrediting agencies or
foreign educational institutions that do not participate in HEA programs, although

1915 U.S.C. § 54. The fines set forth in the statute were superceded by the general fines set
forth in the Sentencing Reform Act of 1984, which applies across the board to all federal
crimes. 18 U.S.C. §§ 3559, 3571.
2015 U.S.C. § 57b(b).
21Id. at § 53.
22Bear, supra note 5; STEWART, supra note 6, at 159. A search of federal legal databases
uncovered only one reported diploma mill case that was litigated in the federal courts
(Branch v. Federal Trade Com., 141 F.2d 31 (U.S. App., 1944)) and two reported cases at
the agency adjudication level (80 F.T.C. 815 (FTC 1972); 71 F.T.C. 193 (FTC 1967)), but
all of these reported cases occurred before 1972. However, it is possible that the FTC
chooses to resolve diploma mill cases informally or that the cases are not reported in federal
legal databases.
2320 U.S.C. § 1099b. Indeed, institutions of higher education must be accredited in order to
receive federal funds under Title IV of the Higher Education Act. Id. at §§ 1002, 1099c. See
also, CRS Report RL32989, Accreditation and the Reauthorization of the Higher Education
Act, by Rebecca R. Skinner and Jody Feder.
24Letter from Rod Paige, Secretary of Education, to Senator Susan M. Collins (Oct. 9, 2003),
[ ht t p: / / www.ed.gov/ pol i c y/ hi gher ed/ gui d/ secl et t e r / 031009.ht ml ?exp=0] .

U.S. accrediting agencies that have been recognized by ED may accredit foreign
institutions that they determine to be comparable to U.S. institutions.25 Because many
U.S.-based employers, academic institutions, and professional licensing organizations
require evidence of academic achievement before they will hire, admit, or license
applicants, individuals that have earned degrees or credits from institutions that are
not accredited in the U.S. can verify their foreign academic credentials by consulting
private organizations that provide credential evaluation services in order to establish
that such foreign degrees or credits are comparable to those received from U.S.
Despite ED’s lack of oversight responsibility with respect to diploma mills, the
agency has taken several steps to curb the proliferation of these phony institutions.
To that end, ED has established a section on its website with detailed information on
diploma mills and how to avoid them.27 In particular, ED maintains on this website
a list of recognized accrediting agencies and accredited institutions so that students
can verify that they will be attending a legitimate college or university.28 In addition,
ED has taken a leading role in facilitating interagency coordination with respect to
diploma mills. Recently, for example, ED convened a meeting of federal and state
officials in order to “share information and create awareness about federal and state
efforts to address the problem of diploma mills and to lay the groundwork for greater
coordination in the future.”29
In its capacity to issue visas that allow entry into the U.S., the U.S. Citizenship
and Immigration Services (USCIS) of DHS also confronts the problem of diploma
mills. For example, in order to receive a student visa, students must be enrolled in a
federally approved academic institution.30 Likewise, some types of employment visas
require a baccalaureate or advanced degree to qualify.31 Thus, existing immigration
requirements and procedures provide guidelines for examining academic or
professional credentials, including provisions for requesting an advisory evaluation

25Department of Education, Diploma Mills and Accreditation — Diploma Mills,
[http://www.ed.gov/student s/prep/college/diplomamills/diploma-mills.html ].
26Id. See also, Alex Mindlin, Vetting Those Foreign College Applications, NY Times (Sept.

29, 2004), at B1.

27See [http://www.ed.gov/students/prep/college/diplomamills/index.html].
28See [http://www.ed.gov/admins/finaid/accred/index.html] and
[http://ope.ed.gov/accreditation/]. As ED notes, however, “the database [of accredited
institutions] does not include a number of postsecondary educational institutions and
programs that elect not to seek accreditation but nevertheless may provide a quality
postsecondary education.” Id.
29Press Release, Department of Education, Statement by Assistant Secretary for
Postsecondary Education Sally L. Stroup (Jan. 15, 2004),
[ ht t p: / / www.ed.gov/ news/ pr essr el eases/ 2004/ 01/ 01152004a.ht ml ] .
308 U.S.C. § 101(a)(15)(F) and (M).
31Id. at §§ 1184(i)(1)(B), 1153(b)(2), 1153(b)(3)(A)(ii).

from a credential evaluation service such as those described above.32 Despite
concerns from some observers about the possible national security implications of
diploma mills,33 existing immigration requirements and procedures provide for the
screening of all visa applicants for terrorism and criminal grounds of
inadmissibility.34 Therefore, an alien who is a known or suspected terrorist would be
denied a visa regardless of whether the alien offers a fraudulent diploma as
supporting documentation for an employment-based visa application or attempts to
apply for a student visa at an unapproved institution.
Other federal agencies have some involvement with the problems posed by
diploma mills, although these agencies appear to have no direct regulatory authority
over the activities of diploma mills. For example, as noted above, the IRS has been
known to participate in prosecutions of diploma mill operators where tax fraud is
involved, and attorneys with DOJ prosecute cases involving fraud against the federal
government The Secret Service has also been involved in diploma mill
investigations.35 Finally, certain OPM regulations that bar federal job applicants and
employees from making misrepresentations to federal agencies, as well as other
federal laws that punish individuals who make false or fraudulent statements to the
federal government, appear to affect individuals whose claims of educational
achievement are based on degrees received from diploma mills. It is these personnel
rules and anti-fraud laws that most directly apply to situations involving use of
diploma mill degrees in federal employment.
Use of Diploma Mill Degrees in Federal Employment
Under federal law, both OPM and relevant agencies are authorized to establish
a minimum educational requirement for a given job “if the duties of a scientific,
technical, or professional position cannot be performed by an individual who does
not have a prescribed minimum education.”36 As a result, many federal jobs require

32See 8 C.F.R. § 214.2(h)(4)(iii)(C & D); and Department of Homeland Security
Adjudicator’s Field Manual §§ 10.5, 31.3(d & g), Appendix 22-1 (Educational and
Experience Requirements for Employment-Based Second Preference (EB-2) Immigrants),
Appendix 31-2 (H-1B Standard Operating Procedures).
33CNN transcript 121501CN.V99, Paula Zahn Now: Diploma Mills Represent Security
Threat to United States? (Dec. 15, 2005) (available on Lexis/Nexis).
34See CRS Report RL32564, Immigration: Terrorist Grounds for Exclusion and Removal
of Aliens, by Michael John Garcia and Ruth Ellen Wasem; CRS Report RL31512, Visa
Issuances: Policy, Issues, and Legislation, by Ruth Ellen Wasem; and CRS Report
RL32366, Terrorist Identification, Screening, and Tracking Under Homeland Security
Presidential Directive 6, by William J. Krouse. See also, 9 F.A.M. §§ 40.32 notes (consular
guidelines on inadmissibility for terrorist activities), 40.37 (Visa Viper terrorist reporting
program), 202 (Consular Lookout and Support System [CLASS]), and 501 (special
clearance procedures).
35Thomas Bartlett, Government Raids a Diploma Mill, The Chronicle of Higher Education
(Sept. 2, 2005), at 39.
365 U.S.C. § 3308.

applicants to have degrees in specific fields, such as law or medicine.37 Although
federal personnel rules do not appear to address the issue of fraudulent academic
credentials directly, federal law does direct OPM to consider the character of job
applicants and to examine their suitability for federal employment.38 As part of this
suitability review, OPM is authorized to take action against applicants, appointees,
and employees to “protect the integrity or promote the efficiency of the service.”39
According to the regulations, OPM may consider “dishonest conduct” and “material,
intentional false statements or fraud in examination or appointment” as a basis for
such a determination.40 Thus, it appears that individuals who knowingly use
fraudulent academic credentials in order to secure federal employment are subject to
disciplinary action, including cancellation of eligibility, denial of appointment,
removal, cancellation of reinstatement eligibility, or debarment for a period of up to
three years.41 Moreover, according to OPM, falsification of security clearance forms,
which require information about education history, is a separate offense that could
lead to loss of employment and/or security clearance.42
In order to combat the use of diploma mills in federal employment, OPM
recently announced revisions to federal employment application forms and to OPM’s
USAJOBS website, which provides information about federal jobs and application
documents. These revisions include the addition of an accreditation field that asks
applicants whether their academic institutions were accredited by ED at the time of
attendance. The revised documents also instruct applicants not to list credentials
obtained from diploma mills, degrees based only on life experience, or degrees
obtained from schools with few or no academic standards.43
In addition to revising federal employment forms, OPM has recently held a
series of training sessions for managers at federal agencies in order to provide
information about diploma mills and guidance for detecting the use of fraudulent
credentials by federal employees. OPM has also indicated that it plans to hire
additional staff to “oversee the adjudication of and conduct appropriate follow-up to

37Stephen Barr, Agencies Learn to Check That Degrees Are From Accredited Colleges,
WASH. POST, Aug. 14, 2003, at B2.
385 U.S.C. § 3301.
395 C.F.R. § 731.201.
40Id. at § 731.202.
41Id. at § 731.203-04.
42Patience Wait and Wilson P. Dizzard, Paper Chase: Diploma Buyers Beware,
43See Proposed Collection; Comment Request; Review of a Revised Information Collection:
OPM Form of 612, Optional Application for Federal Employment Resume Builder in
USAJOBS website and the USAJOBS website, 69 FR 62101 (Oct. 22, 2004); and
Submission for OMB Review; Comment Request for the Elimination of OPM Optional
Form 510, Applying for a Federal Job; the Revision of OPM Optional Form 612, Optional
Application for Federal Employment; the Resume Builder in the USAJOBS website; and
the USAJOBS website, 70 FR 44699 (Aug. 3, 2005).

personnel background investigations where diploma mill and other significant issues
are identified.”44
In addition to regulations regarding employee suitability, federal law allows
agencies to pay for any academic degree training received by their employees, as long
as such training is provided by a college or university that is accredited by a
nationally recognized body.45 Since one hallmark of diploma mills is a lack of
accreditation, such regulations appear to bar the use of federal funds to pay for
employees to receive phony degrees from diploma mills. No such bar, however,
appears to be applicable to the use of agency funds to pay for individual training
courses offered by unaccredited school. Rather, OPM regulations specify only that
“the agency head shall evaluate training to determine how well it meets short and
long-range program needs by occupations, organizations, or other appropriate groups
and that the “agency head may conduct the evaluation in the manner and frequency
he or she considers appropriate.”46
Several years ago, the Government Accountability Office (GAO; formerly the
General Accounting Office) conducted an investigation to determine whether the
federal government has paid for diploma mill degrees and whether federal employees
who hold senior-level positions claim degrees from diploma mills. As a result of this
investigation, GAO identified nearly $170,000 in fees that the federal government
has paid on behalf of employees who have obtained degrees from diploma mills and
28 senior-level federal employees with diploma mill degrees at the eight agencies
selected for review. For a variety of reasons, GAO has indicated that both figures
appear to understate the extent of federal payments and the number of federal
employees associated with diploma mills.47
To clarify federal employment policy with respect to academic credentials and
employee training programs, OPM recently issued revisions to its Qualifications
Standards Operating Manual. Under these revisions, OPM specified that applicants
from institutions accredited by ED-recognized accrediting agencies or pre-accredited
by ED meet the minimum qualification requirements for federal employment, but
that applicants with credentials from pre-accredited schools, unlike those from
accredited schools, are not eligible for student loan repayments. Although federal
employees may not attend degree training programs at an institution unless it is

44News Release, Office of Personnel Management, OPM Director Kay Coles James Sets
Aggressive Agenda for Bogus Degree Training (May 4, 2004),
[ h t t p : / / w w w .opm.gov/news/opm-director-ka y-coles-j a me s-sets-a ggr e s s i ve -a ge n d a -f o r -b o
gus-degr ee-training,270.aspx].
455 U.S.C. § 4107.
465 C.F.R. § 410.601. See also 5 U.S.C. § 4109.
47General Accounting Office (now Government Accountability Office), Federal Employees
Have Obtained Degrees From Diploma Mills and Other Unaccredited Schools, Some at
Government Expense (GAO-04-771T) (May 11, 2004),
[http://www.gao.gov/new.items/d04771t.pdf]; see also, General Accounting Office (now
Government Accountability Office), Diploma Mills Are Easily Created and Some Have
Issued Bogus Degrees to Federal Employees at Government Expense (GAO-04-1096T)
(Sept. 23, 2004), [http://www.gao.gov/new.items/d041096t.pdf].

accredited, they are eligible for tuition reimbursement for attending individual
training classes at schools that are pre-accredited or that are deemed comparable to
accredited institutions. Applicants from institutions in the latter category, including
foreign schools, may also be deemed qualified for federal employment if they meet
certain criteria set forth in the operating manual. Federal agencies, however, may not
consider or accept credentials from diploma mills for any aspect of federal
employment, including eligibility standards, student loan repayment, or employee
training of any kind.48
In addition to OPM’s personnel rules barring the use of diploma mill credentials
in federal employment, other federal statutes may also be relevant to combating the
use of fraudulent degrees. For example, a federal employee who knowingly and
intentionally makes false or fraudulent statements or uses fake documents containing
false or fraudulent statements may violate federal criminal law. According to the
whoever, in any matter within the jurisdiction of the executive, legislative, or
judicial branch of the Government of the United States, knowingly and willfully
. . . makes any materially false, fictitious, or fraudulent statement or
representation; or . . . makes or uses any false writing or document knowing the
same to contain any materially false, fictitious, or fraudulent statement or entry;49
shall be fined under this title or imprisoned not more than 5 years, or both.
Since issues related to personnel or employment practices may be considered
to be matters that fall within the jurisdiction of the various branches of government,
a federal employee who knowingly and intentionally uses a phony degree to secure
federal employment or advancement could potentially be criminally liable. It is
important to note, however, that this statute requires evidence of a specific intent to
defraud, which is often difficult to establish. In addition, because of the intent
requirement, this law would not apply to federal employees who, believing that their
degrees are legitimate, innocently claim educational achievement based on degrees
from diploma mills.
Likewise, an employee who knowingly and intentionally secures agency funding
to pay for his or her fraudulent degree may violate federal criminal laws. Indeed, any
individual who “knowingly and with intent to defraud the United States, or any
agency thereof, possesses any false, altered, forged, or counterfeited writing or
document for the purpose of enabling another to obtain from the United States, or
from any agency, officer or agent thereof, any sum of money, shall be fined under this

48Office of Personnel Management, Qualification Standards for General Schedule Positions,
Part E.4-E.4(a), [http://www.opm.gov/qualifications/SEC-II/s2-e4.asp]]. See also,
Memorandum for Department and Agency Heads from Kay Coles James, Director, Office
of Personnel Management, Strengthening Oversight of the Use of Diploma Mill Credentials
in Federal Employment (May 13, 2004),
[http://www.opm.gov/Stra t e gi c _ M a n a ge me n t _ o f _ H u ma n _ C a p i t a l / G u i d a n c e / 2004/Diplo
4918 U.S.C. § 1001.

title or imprisoned not more than five years, or both.”50 Although it does not appear
that this provision has been applied to diploma mill fraud in the context of federal
employment, the language of this provision suggests that federal employees could
potentially incur criminal penalties for collaborating with a diploma mill in order to
get a federal agency to pay for a phony degree. Like the more general provision
regarding false or fraudulent statements, this provision requires evidence of a specific
intent to defraud. Finally, conspiracy to commit fraud against the United States
government is also a federal crime punishable by fine, imprisonment for up to five
years, or both.51
III. State Oversight of Diploma Mills
As noted above, state governments, rather than the federal government, have
primary responsibility for overseeing education in the United States. Laws regarding
diploma mills, however, vary widely in strength and effectiveness from state to state.
While some states have strong laws that explicitly prohibit diploma mills and enforce
these laws vigorously, other states have weak laws, lax enforcement, or both. This
section examines a representative sample of state laws pertaining to diploma mills.
It is important to note, however, that in addition to laws that specifically address
diploma mills, many states have general anti-fraud statutes or professional licensing52
laws that may also apply when states are seeking to curtain diploma mill activities.
These laws are beyond the scope of this report and therefore are not included in the
discussion below.
States that have strong laws regarding diploma mills include Oregon, New
Jersey, and Illinois. Under Oregon law, for example, the Office of Degree
Authorization (ODA) in the Oregon Student Assistance Commission is empowered
to approve schools that offer academic degrees, validate claims of degree possession,53
and terminate substandard of fraudulent degree activities. Schools are prohibited
from awarding degrees or from providing services purporting to lead to a degree54
unless they are approved by ODA, and individuals are barred from claiming that
they possess an academic degree unless: that degree has been awarded by an
institution that is approved by ODA or that is accredited by an agency recognized by
ED; or the claim is accompanied by a disclaimer regarding the lack of accreditation
and ODA approval. The penalty for individuals who violate this latter provision is

50Id. at § 1002.
51Id. at § 371. Limits on all the above fines are set forth at 18 U.S.C. § 3571.
52For example, several states have laws that bar the use of phony degrees by dentists,
doctors, veterinarians, chiropractors, opticians, podiatrists, and/or teachers. Joan E. Van Tol,
Detecting, Deterring and Punishing the Use of Fraudulent Academic Credentials: A Play
in Two Acts, 30 Santa Clara L. Rev. 791, 827 n. 83 (1990).
53ORS § 348.603.
54Id. at § 348.606.

a fine of up to $1,000.55 Oregon appears to aggressively enforce this statute, and
ODA maintains a website with a list of unaccredited institutions whose degrees may
not lawfully be used in the state.56
Under New Jersey law, the buying or selling with intent to deceive of any
diploma purporting to confer an academic degree is unlawful.57 Furthermore,
individuals are prohibited from using fraudulent academic credentials in connection
with any business, trade, profession, or occupation, and may not intentionally
misrepresent themselves as having received such a degree.58 Individuals who violate
the New Jersey statute are liable for a civil penalty of $1,000 per offense.59
Similarly, Illinois’ Academic Degree Act aims to prevent the use of fraudulent
academic credentials. Under the statute, institutions are prohibited from awarding any
degrees until they have received authorization and approval from the State Board of
Higher Education. In order to qualify for approval, institutions that provide education
in residence must require an appropriate period of instruction, while institutions that
do not conduct instruction in residence must meet criteria regarding physical
facilities, faculty, and record keeping.60 The Board of Higher Education is authorized
to inspect the premises of degree-granting institutions, and refusal to permit such
inspections is punishable by a revocation of approval, as well as other penalties
available under the act.61 Since violations of the act are a felony, such penalties
include fines, restitution, probation, or imprisonment.62 According to one diploma
mill expert, Illinois is a state that aggressively enforces its diploma mill laws.63
Although Oregon, New Jersey, and Illinois are not alone in having strong
diploma mill laws that are effectively enforced, some states have weak laws, law
enforcement, or both. According to one diploma mill expert, Mississippi, Alabama,
and Wyoming offer three examples of states that remain diploma mill havens.64
Neither Mississippi nor Alabama appears to have laws specifically targeting diploma
mills on their books. Wyoming, on the other hand, does have laws requiring
institutions that are located in the state and that lack legitimate accreditation to be
licensed by the state, to maintain physical facilities, to be inspected by the state, and

55Id. at § 348.609.
56Office of Degree Authorization, Oregon Student Assistance Commission, Unaccredited
Colleges, July 18, 2003, [http://www.osac.state.or.us/oda/unaccredited.html].
57N.J. Stat. § 18A:3-15.1.
58Id. at § 18A:3-15.2.
59Id. at § 18A:3-15.5.
60110 ILCS §§ 1010/4, 1010/5.
61Id. at § 1010/6.
62Id. at § 1010/8; 730 ILCS 5/5-5-3.
63Bear, supra note 5.
64Dan Carnevale, Mississippi May Restrict Online Diploma Mills, THE CHRONICLE OF
HIGHER EDUCATION, October 17, 2003.

to employ instructors who meet certain educational criteria.65 The law also prohibits
institutions from awarding degrees solely on the basis of payment of tuition or other
suspect criteria or from falsely claiming accreditation.66 Violations of the statute are
punishable as a misdemeanor by a fine of up to $1,000 or up to six months in prison,
or both.67 Despite these prohibitions and penalties, Wyoming reportedly does not
vigorously enforce its higher education licensing laws.68
Ultimately, it appears that the majority of states has laws that specifically target
diploma mills.69 In addition, most states have laws of more general applicability, such
as statutes pertaining to “civil actions for fraud and misrepresentation and criminal
prosecutions for forgery, embezzlement, theft of services, or false pretenses or
impersonation,”70 that they can use to shut down diploma mills should they choose
to do so. Enforcement of such laws, however, appears to vary from state to state, with
“relatively few reported cases involving the criminal prosecution of persons who
have made or used fraudulent academic credentials.”71 In part, successful
prosecutions may be rare since it is difficult to determine jurisdiction if a diploma
mill operates in several states at once and since such institutions may relocate quickly
and easily if the state in which they reside cracks down. Thus, the popularity of a
given state as a haven for diploma mills often changes over time. As one
commentator concludes:
In the end, sound legislation at the state level is the first line of defense against
unscrupulous diploma mill operators. But legislation by itself is insufficient. A
well-equipped enforcement agency and a public mood that will support its efforts72

are also needed.
65Wyo. Stat §§ 21-2-401 and 402.
66Id. at § 21-2-404.
67Id. at § 21-2-407.
68Mead Gruver, Wyoming Called a Diploma-Mill Haven, Wash. Post (Feb. 13, 2005), at
69Although this list is by no means exhaustive, the following states have laws that target
fraudulent academic credentials: California (Cal. Ed. Code § 94050); Florida (Fla. Stat. §§
817.06, 817.566-67); Hawaii (H.R.S. §§ 446E-1 et seq.); Illinois (110 ILCS §§ 1010/0.01
et seq.); Iowa (Iowa Code § 715A.6A); Louisiana (La. R.S. 17:1808); Maine (20-A M.R.S.
§§ 10702, 10704, 10705, 10709, 10711); Maryland (Md. Education Code Ann. § 26-301):
Michigan (MCLS §§ 390.1601 et seq.); Nevada (NRS §§ 394.620 et seq.); New Hampshire
(RSA 638:15-a); New Jersey (N.J. Stat. §§ 18A:3-15.1 et seq.); New York (NY CLS Educ.
§§ 224, 225); North Carolina (N.C. Gen. Stat. § 14-122.1); North Dakota (N.D. Cent. Code
§§ 15-20.4-15, 15-20.4-17); Oregon (ORS §§ 348.594 et seq.); Rhode Island (R.I. Gen. Laws
§§ 11-58-1 et seq.); South Dakota (S.D. Codified Laws § 36-4-30); Tennessee (Tenn. Code
Ann. § 39-17-112); Texas (Tex. Educ. Code § 61.304); Virginia (Va. Code Ann. § 18.2-

172.1); Washington (Rev. Code Wash. § 28B.85.020); and Wyoming (Wyo. Stat. §§ 21-2-

401 et seq.).

70Van Tol, supra note 52, at 817.
72STEWART, supra note 6, at 137.

IV. Common Law Tort Actions
Against Diploma Mills
In addition to prosecution under state and federal legislation, diploma mills may
potentially be subject to a common law tort action for negligent misrepresentation or
fraud. Under a lawsuit for fraud, an individual who was injured as a result of
receiving a phony degree from a diploma mill could sue for damages if: (1) the owner
or operator of the diploma mill knowingly made false representations regarding the
quality of the degree and (2) the individual relied on those statements to his or her
pecuniary detriment.73 A suit for negligent misrepresentation may be pursued if the
defendant did not exercise reasonable care or competence in obtaining or
communicating the false information, even if there was no intention to deceive nor
knowledge of the information’s falsity.74 In addition to common law actions for fraud
or misrepresentation, many states have enacted unfair or deceptive practices statutes
that provide consumers with remedies against false, misleading, and deceptive
business practices, unconscionable actions, or breach of warranty. Depending on the
circumstances, victims of diploma mill scams might be able to assert claims under
these state statutes.
V. Enforcement
Despite the available array of laws targeting diploma mills, these phony
institutions continue to exist. Many observers believe that “[t]here appears to be a
lack of prosecutorial interest at both the state and federal level in pursuing cases
involving fraudulent academic credentials.”75 Certainly, there have been notable
examples of diploma mill prosecutions over the years.76 Nevertheless, the strength
of overall enforcement efforts is difficult to gauge since it is unclear how many
prospective cases have remained unpursued.77

73RESTATEMENT (SECOND) OF TORTS §§ 525-26, 537 (1977).
74Id. at § 552.
75Van Tol, supra note 52, at 817.
76See id., at 827 n. 15, 827 n. 16, 827 n. 77, 827 n. 79 (citing, among other cases, United
States v. Fowler, 870 F.2d 656 (4th Cir. 1989); Chong v. Sobol, 540 N.Y.S.2d 382 (App. Div.

1989); Alexander v. United States, 95 F.2d 873 (U.S. App. , 1938); and People v. Sanchez,

33 Cal. Ap. 3d 413, 109 Cal. Rptr. 56 (1973)).

77Because a search of legal databases reveals only cases that have been reported at the
federal and state level, it is impossible to determine how many cases have gone unreported
or have not been prosecuted to begin with.