Scholarship scams are so widespread that in 2000, the Scholarship Fraud Prevention Act was passed into law for the purpose of protecting consumers against financial aid fraud. This law stiffened penalties against those convicted of scholarship fraud.
Before this law was passed, those convicted of scholarship fraud were put out of business and ordered to pay restitution to people they defrauded. Now, thanks to the Scholarship Fraud Prevention Act, offenders face both jail time and fines of up to half a million dollars. Additionally, this law removed a loophole from the bankruptcy laws to ensure that offenders cannot keep income gained through scholarship scams.
Further, this law mandates that the U.S. Department of Education and Federal Trade Commission publish information about scholarship scams on their website.
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