Essay-writing companies are trying to blackmail students by threatening to expose their cheating unless they hand over large sums of money, a university watchdog has warned.

The Quality Assurance Agency (QAA), which monitors standards in higher education institutions, has said that students who cheat by using “essay mills” put their careers and reputations “at risk”.

And some cheating students are being asked to pay even more to essay companies or risk being exposed to their institution for malpractice, Douglas Blackstock, chief executive of QAA, has said.

The warnings come as the education secretary launched a series of measures to "beat the cheats" using essay writing services at university, saying he has not ruled out making them illegal.

Online giants such as PayPal must stop processing transactions for essay mills as it is their “moral duty” to prevent practices which exploit young people, Damian Hinds has said.

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Mr Hinds is calling on universities to get tougher on cheating and to consider the introduction of "honour codes" which would see students pledge not to use essay-writing services for assignments.

Students who know peers are cheating should also become whistleblowers, he said. “Nobody likes the idea of telling on your friends but there should be a culture which says it is not okay to cheat.”

Mr Hinds admitted that honour codes are unlikely to solve the issue on their own, but they could be used alongside more anti-cheating software and less dependency on essays to assess students.

The government action comes after YouTube deleted thousands of videos promoting academic cheating and Google removed hundreds of adverts for essay-writing services.

Mr Hinds said: "It is simply unethical for these companies to profit from this dishonest business which is exploiting young people and it is time to stamp them out of our world-class higher-education sector.

"I am determined to beat the cheats who threaten the integrity of our system and am calling on online giants, such as PayPal, to block payments or end the advertisement of these services – it is their moral duty to do so.”

The minister said the internet has seen “a black market in essay writing services spring up”, and he added that it is “likely” that the incidents of cheating has increased.

A recent study by Swansea University revealed a 15.7 per cent rise in the number of students around the world who admitted paying someone else to undertake their work between 2014 and 2018.

In 2016, the QAA found approximately 17,000 instances of academic offences per year in the UK. But the number of students using essay-writing services is thought to be much higher.

Mr Blackstock said: “Companies that try to entice students to buy so-called plagiarism-free essays pose a real threat to the academic integrity of our higher education.”

The watchdog chief called for the “unscrupulous operators” to be stopped in their tracks.

He added: “More worryingly, we have recently heard stories of essay companies attempting to blackmail students by threatening to expose them unless they hand over greater sums of money.”

Nicola Dandridge, chief executive of the Office for Students, the regulator, said: “The essay mills industry constitutes a cynical attempt to normalise cheating and it has no place in universities.

“Their operations can never be justified, are detrimental to the studies of those using them, and deeply unfair on the vast majority of students who complete their own work.”

Amatey Doku, from the National Union of Students (NUS), said: “[Essay mills] are exploitative organisations, which explicitly play on students’ vulnerabilities to make money.

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“NUS is keen to explore what best practice can be developed to prevent students feeling like they are in a position where using such a service is their only choice.”

In September last year, university leaders called for essay mills to be made illegal in the UK.

The Department for Education has not ruled out legislation to ban these companies, Mr Hinds said.

Chris Hale, director of policy at Universities UK (UUK), said: “All universities have codes of conduct that include severe penalties for students found to be submitting work that is not their own.

“Such academic misconduct is a breach of an institution's disciplinary regulations and can result in students, in serious cases, being expelled from the university.

“Universities have become increasingly experienced at dealing with such issues and are engaging with students from day-one to underline the implications of cheating and how it can be avoided.”