Scams checklist: What Muslims need to do to avoid scams

In this piece, Umer Suleman from Wahed gives the Muslim community some tips and techniques to help us avoid scams.

We all have a responsibility to flush out scammers. We must be aware of people and organisations, in our communities, who are taking advantage of people.

One of the higher aims of the Sharia is the preservation of wealth. And the preservation of wealth means that no one should take advantage of it. No one has a right to it, when it’s yours.

In an earlier article, I talked about the 3 top scams that I think Muslims should be aware of. In this piece, I give you some tips and techniques on what you can do to ensure that you don’t fall prey to scams.

Find out the risks

If someone suggests an investment opportunity, and they minimise any risks associated with it or don’t mention them at all, be cautious.

The nature of investments is that they have elements of risk and reward. That’s what makes it an investment. If someone does not talk to you about the risks at all, then big alarm bells should ring.

What exactly are they doing to make money?

Underpinning all of this is actually the fundamentals and principles of Islamic investments. Ask the questions what are you investing in? Is it permissible?

Do you know what you’re exchanging? Do you have evidence of the exchange that’s happening? One of the conditions of a Sharia-compliant contract is that both the seller and the buyer know what’s being exchanged.

Trustworthiness is no guarantee

The person you’re dealing with, you might think they’re trustworthy because you see them regularly at the masjid. Unfortunately, it’s no marker of whether they’ll take advantage of you or not.

Often scammers aren’t unknown people, they can be those close to you or someone who the family trusts. Even if they seem to say all the right things, it shouldn’t stop you from doing your due diligence.

Ask questions and do research

Any genuine person offering an investment will not mind you asking them questions. Is it permissible? Are they giving genuine returns? How are they giving you those returns?

Look at the person, have they registered the company on Companies House? Is their activity what they claim it is? For example, are they saying they’re selling land but actually it’s registered as something else?

Also, look up the person. Does this person have a background in the business they’re talking about? See if they are on the list of directors disqualified by the government.

If the company is genuine, for regulation purposes, they must do some checks on you too. They should be doing their due diligence and asking you questions.

A checklist of things to do

  • Make sure the investment meets all the halal criteria. You also have a religious duty to not perpetuate scams. If you’re investing and advocating for something that turns out to be a scam, think of all the people who can get caught up in it because of you.
  • If you’re promised astronomical returns, question it. Anything between 4%-10% per annum is seen as a very good return. If someone says they can double your money, you need to really understand how that’s possible.
  • Be careful if someone asks you to put money into a personal bank account rather than a company account, or a bank account with a completely different company name. – Do a Google search on the company and see if anything come up – check out Companies House. Search the people involved online, look for reviews and see if they’re barred from being company directors
  • Look at the registered address of the company, if they have one. Who else is registered at that address? If you find hundreds of companies registered at the same address, then maybe something is going on there?
  • Is the company regulated? If they’re asking you to invest in their product, they should be regulated by the FCA. It also means that if something does go wrong, you can raise the case with the Financial Ombudsman and potentially get your money back. – You can check the FCA’s ScamSmart tool to see if an investment or pension opportunity you’ve been offered is a scam

These are some of the actions you should take when you are offered an investment opportunity. And always remember the adage: if it sounds too good to be true, it most probably is!


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