Lesson 2: Business Ethics, Financial Transactions and the Prohibition of Fraud and Monopoly

• Islam builds financial dealings on justice, honesty and trustworthiness joined to mercy toward people.
• It forbids usury (riba), fraud, monopoly and the exploitation of people's needs, so that solidarity and prosperity are preserved.

The default rule in transactions

• "God has permitted trade and forbidden usury" — al-Baqara 275.
• "O you who believe, do not consume your wealth among yourselves by false means, unless it be a trade by mutual consent" — an-Nisa 29.
• Mutual consent (tarad) between the two parties is a condition of a valid sale.

Honesty and trustworthiness

• The Prophet ﷺ said: "The truthful, trustworthy merchant is with the prophets, the truthful ones and the martyrs."
• Honesty in describing the goods and their price; trustworthiness in measuring, weighing and fulfilling the contract.

Generosity and forbearance (samh)

• The Prophet ﷺ said: "May God have mercy on a man who is generous when he sells, when he buys and when he settles a debt."

Fulfilment of covenants

• "O you who believe, fulfil your contracts" — al-Ma'ida 1.

Justice in weighing

• "Woe to those who give less" — al-Mutaffifin 1.
• Tatfif: shortening the measure or the weight when selling — one of the gravest forms of cheating.

Definition

• Ghashsh: concealing a defect in the goods, or deceiving the buyer with something contrary to the truth.

Ruling and evidence

• Fraud is forbidden; it is a betrayal of trust and an injustice to people.
• The Prophet ﷺ said: "Whoever deceives us is not one of us" (man ghashshana falaysa minna).
• He passed by a heap of food, put his hand into it and found it wet. He said: "What is this, O owner of the food?" and reproached him for hiding it, saying: "Why did you not put it on top so that people could see it?"

Forms of fraud

• Hiding defects in the goods, tampering with measures and scales, false advertising, and counterfeiting well-known brands.

Its effects

• Loss of trust between people, weakening of the economy, and the removal of blessing from earnings.

Definition

• Ihtikar: withholding goods from people in order to drive their prices up.
• It harms public interests and contradicts the principle of mercy and solidarity.

Evidence

• The Prophet ﷺ said: "Only a sinner withholds (monopolises)" — la yahtakiru illa khati'. Here "khati'" means the one who commits sin.

The Islamic position on monopoly and hoarding wealth

• The Qur'an forbids both monopoly and hoarding wealth and withholding it from circulation, and urges directing wealth to what serves the public good of the society.
• "And those who hoard gold and silver and do not spend it in the way of God — give them tidings of a painful punishment" — at-Tawba 34.

What monopoly produces

• Rising prices and heavier burdens on the poor and the needy.
• Depriving people of their basic needs and sowing resentment between the classes of society.

• Economic solidarity: directing wealth toward what serves the public good of the society.
• The Qur'an forbids leaving wealth in the hands of the reckless (sufaha') who misuse it.

Moderate spending

• Islam makes spending a middle course between extravagance and stinginess.
• "And do not make your hand chained to your neck, nor stretch it out to its full stretching" — al-Isra 29.

Zakat

• Among the means of solidarity that zakat is taken from the wealthy and returned to the poor.
• Its purpose: to meet the needs of those in need, to guarantee them a sufficiency level, and to strengthen the community.

• The Prophet ﷺ said: "La darar wa la dirar" — there is no harming and no reciprocating harm.
• Every transaction that harms people or exploits their need is forbidden, even if outwardly it looks like ordinary buying and selling.
• Islam protects buyer and seller alike by forbidding fraud, monopoly and short measure.

• Trustworthiness at work and in one's job, and rendering rights to their owners.
• The prohibition of bribery and of consuming people's wealth by false means.
• Giving the insolvent debtor respite and making things easy for him.
• Paying off debt promptly, without delaying it against the creditor's right.

• Financial transactions in Islam rest on justice, honesty, trustworthiness and mutual consent.
• Fraud is forbidden: "Whoever deceives us is not one of us."
• Monopoly is forbidden: "Only a sinner monopolises", and hoarding wealth is likewise barred.
• Spending is a middle way between extravagance and stinginess, and economic solidarity is an obligation on the community.