Lee Holmes put Preston ahead seven minutes before the break and Nicky Wroe doubled the advantage after 78 minutes after pouncing on goalkeeper Eirik Holmen Johansen's error.
Jack King sealed the win for North End in stoppage time to leave Scunthorpe in the drop zone, level on points with Oldham in 20th place but with a worse goal difference and having played two games more.
With the Latics losing it was another chance missed to climb out of the bottom four, and with only four games to go Laws insists the time has come for his side to face facts.
"I'm bitterly disappointed, not just with the result but the manner in which we lost hurt me personally and it should hurt the players," said Laws.
"The things I said in the dressing room will stay in the dressing room because I don't think the players themselves can take that kind of criticism.
"Let me tell you there has been a bit of paint stripped off the walls, but I've also got to nurture them to get the best out of them as that's my job.
"But I feel like I've let down the supporters because I haven't got the best out of them.
"I can apologise to the fans on behalf of the players because they will be very angry, they've paid good money and don't want to see their team go down in a whimper.
"I thought there were only two or three players that rolled their sleeves up, the rest fell into a hole and were hiding - I see it and the supporters see it."