Islamic Guidelines to Avoid Financial Scams & Fraud

[Music] asalam alaykum and welcome to uh what is like a mini podcast discussion something that we are thinking to do as a part of Muslim Money Matters my dear friends welcome to this discussions that we have today between friends I hope you guys brought your coffee what are we drinking huhuh I don't do I don't do coffee but I have a massive water bottle next to me so I'm okay oh nice that's beautiful I normally like uh like coffee little bit just to give me bit kick uh kick start so bah simultaneous sip they call it simultaneous sip you know when you are on the on these call so um so we have been talking a little bit in our group about uh what's been happening uh these last uh few weeks in terms of many scams that we see happening and um you you you all wanted us to do something about addressing this talking from Islamic perspective what are the some of the red flags whether it's in finance or some of these getrich quick schemes so maybe before we start maybe if you can just uh for our viewers who are meeting most of us uh for the first time say your name what you do and and where are you located currently hanif let's start with youah uh so my name is Han I'm in London and I'm a social impact consultant that's mainly what I focus on Mah what does that mean what is the source so I work mainly with um larger nonprofits and uh registered social landlords and local authorities around their Community investment programs so just giving them advice on how to design and Implement programs and doing evaluations and those sorts of things so yeah it's interesting I'm been like 22 years uh in that field now Ona mashah you are one of the first I think people who uh who join our Muslim Money Matters program yeah I'm very proud of that I think I as soon as I was waiting and as soon as you launched it I joined alhamdulillah and haven't regretted it so if anyone else is thinking about joining join and you have your own podcast as well we do yeah so myself and that I met in Trinidad um when I was doing consultancy work we started something called Tara Academy just to really help people uh Muslims start their first small business or if they've started one and they're feeling a little bit stuck and we just want to give some very basic simple startup advice that's it nothing complicated we're going to get into this no promises of we're going to help you make this much money every month by doing no work anything like that business is hard work um so we want to just share that lesson unfortunately as we'll get into there are a lot of scammers who promise you other things so yeah and and that's that's that's our philosophy as well you have to actually do something that is real that is benefiting people and then seek your uh livelihood and income through that brother yfam alaykum I'm I'm from Morocco um and I'm actually currently in AB in West Africa visiting my my sister so traveling as I work uh fully remotely I'm able to travel around the world and uh uh and work remotely I am a recruiter so my official title is Talent acquisition partner so what I do is um bring uh bring the best talent uh for the companies I work for uh match them make sure that uh they're they're happy they're well on boarded uh so this is this is my passion this is what I do in my career uh I'm also a language Enthusiast so I I used to teach uh uh French and English uh and uh I speak five languages so this is something that uh that I'm very passionate about as well uh I was also one of the first ones uh to join Muslim Mani matters I actually uh have fond memories of that simultaneous sip actually because uh I used to listen to uh your podcast quite a few times and it was an opportunity for me to learn uh things that are very important for of course for my but also for my to understand how to make my money Halal one hears about this uh when you want to get a little bit closer to Allah you hear this but uh how how do you make your money Halal how do you make sure that you understand all these things so alhamdulillah this uh this kind of Association this community is there to to do that so as brother hanif said I do encourage anyone listening to this to to join us uh and exchange ideas and bring their their expertise uh so I'm I'm going to let uh the others talk thank you very much for that om uh my name is Omar chanar and I'm from Melbourne Australia um not traveling like brother Yousef I wish I was but I'm also a teacher and I teach English and Humanities um I joined Muslim Money Matters uh mostly because I have the privilege of speaking to Al in person and having some in-depth discussions um but also I'd like to participate at home when we go on to the mmm group on WhatsApp and talk about many many things which is one of the topics of today inshallah and brother n alaykum so my name is n I'm from Egypt based inul right now um I work as a program manager in an Italian entrepreneurship school where we help uh young startup Founders work with the best uh mentors and the from the tech companies um to accelerate their startup journey and I first time I got to know um brother alir was in stul was actually in the Masjid right next to my house uh where we this was the first meeting but I've known him uh previously uh online on LinkedIn and after this I definitely I think I was one of the first people to join mm as well I remember when we uh were thinking about the brand ident City uh right next to my house as well in the coffee shop and it was ever since that time it was a an amazing journey so I definitely recommend everyone listening to this podcast to join us as well we had a good uh travel around uh tur around the time when uh we were doing the documentary about tury's economy and uh so yeah it was a it was a good time um the other day I was thinking when we were in Kaa you know that was a such a nice place such a such a lovely food that restaurant next to that mosque it was a very interesting experience uh so we might need a podcast especially on the food and other things you know from different parts of the world you know after this I need a podcast on dieting right now not food you know when you when you when you have a good food then you don't want to overdo it you know so so the best diet you know have a good good food so it's so much you honoring the food eing eting the right amount so um but um yeah today uh I want to uh talk a little bit about this uh topic that is uh really red flags uh you know with the technology and how things are moving everybody wants to get to the money especially as guys in general Young men uh they they have a sense of responsibility they need to provide and sometimes you get into this um situation where you start woring how am I going to provide you know you need to buy the house you need to financially be secure for yourself and your family you need to be a man you know these are responsibilities on my shoulders and uh and and and sometimes people get lost people get desperate they don't see opportunities or maybe they don't do the right things they take the eyes of the ball and so it is very tempting then to do some kind of quick shortcut to avoid all of that discipline hard work that usually takes to get to where you need to be for any result it takes the hard work and so uh this is exactly why some of these scams work because there is this uh need and people uh whenever they is demand for something like as a shortcut to get to that place we see that get quick Rich schemes okay university courses schemes and so on so I guess what I want to uh explore in this uh episode is when you look at the Shar as a Divine system it uh it is said that one of the aims or Masid of sharia is protection of the wealth and so if that is the aim one of the ways that you protect your wealth is not getting scammed or not getting your money where uh it is misused some of these schemes or Investments or Ponzi or pyramids all of different ways and so if this is so can we then dig into Islamic law Islamic system way of thinking philosophy and extract some of the principles that would help us then navigate this okay now if you look at how serious this issue is there is a Hadith in terzi which says that Merchants will be raised on the day of resurrections as evildoers apart from those who fear Allah and are honest this is my first question I just want to explore this idea as as a beginning how actually people get scammed why does it work so much of this goes back to people's mindset you know like like I say everyone has to provide and there's a lot of pressure on people to provide and then beyond just provision some people obviously want to grow their wealth and so on and we we live in a very consumer World Now consumer Society constantly being pushed to buy this and you don't have enough and you're constantly looking up you know on YouTube oh this person's got a Ferrari this person goes on holiday 12 times a year and people really want that kind of lifestyle and they know they need money to make that happen and so there's this real desire but also what people see is what they think they see is other people getting rich quickly you know oh this person was a nobody yesterday and then all of a sudden you know he's got a Ferrari and now he lives in Dubai and all I want that lifestyle as well so if he can do it or she can do it I can do it as well and I think that that initial Bel that that is true and that you can then do that is what really drives people so then they're always on the lookout how can I get rich quickly because everybody else seems to be doing it or some of these people that I admire seem to be doing it and so I want to create shortcuts and I think that's when the first mistake is made why do you think it works what make scam works it's ultimately there's got to be a level of trust isn't it so the their marketing in these scam these scammers is brilliant and then they win your trust and I think maybe that would be interesting to hear from other people as well you know like this idea of trust why do people trust them so much I may may maybe I can give an example of something that I was going to get into a couple of times uh I did not get scamm and it it was not per se a scam but uh it was very very strong marketing promising you certain things um and then selling you something that is ex extremely uh um high priced uh that you might or might not succeed in and I'm talking of course of these these courses uh online that teach you how to become an entrepreneur and do it like uh every everyone else and at the end of the day uh it's about human psychology it's about knowing how to have those email sequences and um having the the trust as hanif said of that person and believing well this person has done it they are showing me how they have done it um and they are showing me that they are able to do it for other people and here are other people here are testimonials here are all of these reviews Etc and then at the end you you might not even think uh that what they are offering is um is expensive because for you the price of what you see is is a lot of money and being becoming rich um so I I remember when I was just starting um I I I started an online uh business uh teach in French at some point and um I started getting lots of courses about how to become a teacher entrepreneur and and and doing these things and and I remember very vividly one one night um it was a very very uh compelling uh course and I was about to to buy it because um it was like a countdown it was telling you that in 2 hours uh or at the end of the hour it's going to uh uh stop and alhamdulillah I did not have money in my bank account I could not pay it and after I slept on it in the morning I realized uh what I was doing uh so at at the end of the day it's about human psychology and like this is something that I've experienced myself and it's not because you're smart that you're not going to get scammed um you you you need to be a able to uh understand your biases understand your limitations as a human being uh knowledge helps but but it doesn't completely protect you from uh from getting scamed sometimes as it was my case you just need to sleep on it and ask people uh sometimes you're you're too much into that that World by yourself online um that uh that you don't know what what you're doing there was a somebody said once that uh based on the price tag of whatever you are buying you should take that long to make a decision so if something is a $10 maybe you can make a decision within few minutes but let's say it's a $100 or whatever is equivalent in different country you maybe make a day or two to make that decision if it is a $1,000 purchase maybe you take a week if it is more than that you take more time basically but you can't start because the deal is going to run out at midnight that's right that's right that's correct that's right and and and and in this you see the basics of mechanics of the of the something which is uh he said there was a pressure there was a time taking taking so the fear of missing out there was a very strong promise marketing you said you will succeed hitting all of your pain points okay and you mention that there was all of these testimonial which they call social proof this is the proof in the absence of an Evidence and this proof is very easy to manufacture in the absence of any tangible results and how to uh connecting the dots from where what you want and what they promising they are offering do something that is very cheap to manufacture right and this builds what hanif was saying that trust but why does it work this is is the question you know let's try to develop Islamic kind of framework of thinking about it by first identify why does something like that work what is the core of the of any scam any um get whether it's a get rich quick or investment that turns out to be uh fake or fraudulent or Ponzi whatever why does it at the end work in in my experience um obviously as you said in the beginning that uh young men are out there wanting to provide for their family thinking okay how can I make um ends meet um and and sometimes even Beyond ends meats you know for example like buying a house and paying it off uh in my experience myself for example thinking okay I've just recently got married alhamdulillah um and I'm thinking okay how can I make money um in a way that I become number one financially free um and the ultimate goal in in my opinion is not Financial Freedom like in my case and many people as well is possibly that Financial Freedom which will lead you to have more time with your family to raise your kids uh upon upon Islam and so on that that's the way that I think about it and that many people kind of you know get um attached to this idea of okay let's get rich quick and then I can spend time with my family I can secure generational wealth um and that way no one needs to to you know work hard or go through the tough life um we have already gone through that for them and now they can focus on their family so there is that uh genuine desire which which is uh in all of us and there is nothing uh blame worthy in fact that's a part of responsibility of the of the men as Muhammad Shaban famous student of Abu hanifah used to say that earning up to the level to secure your needs is the must uh this is of course talking about the man as a head of the household and for the woman that's something that is an option and uh it's it doesn't reach that level like it does for the men uh what about this idea I've been thinking about it I would suggest to you maybe that the main reason why people get scams is that they don't have a full picture what is going on okay yeah as sometimes people say somebody's fishing in the muddy water MH that's a that's a very what do you think a good so I think uh just uh you you everyone touched on a very important point which is fomo maybe I think this is how we would sum it up fomo is a big factor and how people get scammed and I think the other factor is education and I think financial literacy is where this comes in uh just a couple of days ago I was sitting with a family member and um she she works in a in a corporate job she was asking me about how how should I manage this amount of money and blah blah blah and she asked about a couple of uh uh people that suggested certain method that I don't really consider very viable one of which was Forex for example and I just realized that when people get so much into a certain specialization and they lack the general information about finance and financial literacy it's easy to get to get them scammed for the other side and I think if we look in the data of how people who are the people getting scammed the most you'll find that people are working in corporate jobs for example and I think this is due again to the lack of financial literacy they don't know how to manage their money they don't know how is money how is investment working and all of this so I think education is is a big factor in this game and I think people um when you H the the superficial checklist that any human being would want you can you can definitely scam them and this is when we talk about so social proof uh fomo this is all all in all I think a bit superficial this is what any human being would be looking for but when you dig a bit into the details this is where education is going to be needed people who understand what investment means and all of this and and I think education when we say in this particular context mean that you are aware uh that there is out there something that should be like a full picture and then you analyze it and then you become aware well I don't have this information or that information is provided from this Source I need this independently verify I need this disclosed uh and so once you start uh thinking about it based off your knowledge and experience and education uh then what you are I guess trying to reach is is complete the puzzle complete the picture so that there is no blind spot nothing should necessarily surprise you now this this phenomenon what we are then talking about is something that is called information asymmetry and information asymmetry here is when one party has more or better information than the other party which allows or creates opportunity for this deception and exploitation okay and so when you think of this word asymmetry so you have first information this is your knowledge data facts in terms of value of something risk of something terms of that business deal uh investment details and so on and then when you look at the word and YF is a language expert here uh asymmetry what is the asymmetry how would you break that word information asymmetry what is is asymmetry we put you on the SP that that that that's okay uh so so symmetry uh symmetry first is um is something parallel that looks exactly the same so everyone has the same uh information um to make an informed decision and asymmetry would be uh the exact opposite of that so that means that someone has a certain information that the other party does not have um and and in certain cases and uh I I know that in in law as well uh when there is information asymetry um uh there is a certain like it's it's not it's not legal to have a business where for example you are you are uh selling something to clients where you have you know something about the product or the service that you are offering but you're not being transparent about it um and I remember there was a a story but said maybe you can uh remind us the there was a merchant in the market in Medina that had lots of dates and uh and he was selling that as a as a bulk and he put the the best dates at at the top um and there were uh slightly older dates at at the bottom uh and he was selling that and the idea is that why why is this Haram or or or or not good it's because the person buying it thinks sees the the good dates at the top and thinks that they are buying good dates that the the all the uh the whole box is is good dates as long as uh the the seller can tell the buyer that these are good dates these are bad dates this is what the box contains then this is a uh information symmetry so the the both both buyer and seller uh or both business parties know what they are getting into and in this case they can make an informed decision because if if you don't have the the right uh information if you have wrong information you are making the decision based on um false um false information and in in that case you you are not able to make a good decision for yourself so um that's how I understand yeah that's uh actually I'll I'll go back to that Hadith a little bit later because it's very important that the fact that the prophet sallallahu alaihi wasallam uh stuck his hand into the food stuff to check uh what is he selling and underneath was a dump or vet food but before that uh you brought this uh idea that it is illegal also uh to to engage uh which is very interesting because when I was thinking I thought that this uh lack of balance in terms of knowledge uh if I were to frame uh Islamic thinking about uh about engaging in the market I would have thought that this is the first principle that when there is information asymmetry we should not engage in that business not as a buyer not as a seller not as a investor this I would uh propose that if we are to rank and extract some of the principles from the Sharia that are used to protect that wealth and build that a uh build that pillar or Masid that this would be the first one remove information of symmetry at the system level and what is the evidence for this the evidence for this is the Hadith it was narrated that the prophet sallallahu alaihi wasallam forbade artificially inflating prices meeting Traders on the way and for the town dweller to sell to a desert dweller I know we little bit talked about it in our group uh about this so I'll break down this Hadith for example why would you prohibit artificially inflated prices why would the prophet wasam uh prohibit something like this when we know in Islam you have a freedom to trade to set a price uh as high or as low as you want you have a freedom to contract they should not be a a third party uh controlling these fixing the prices and so on so we see this in many narrations and this is a principle uh uh why then have this uh principle prohibition of artificially inflating prices I think maybe what would be helpful is if we Define what that means first like what does it mean to AR artificially inflate a price versus you know let's say naturally or whatever the opposite term might be that I just just decide I want to sell my phone for £1,000 and I just want to find a buyer who's going to buy it for £1,000 so what do we mean by artificially inflating the price uh for example let's say we are bidding on the car and then um uh there is 10 people bidding for the we start with the I don't know $1,000 then somebody say 100 1,10 and then somebody said 1,20 and so the price goes up people are bidding for the car so that is permissible right but what sometimes happen is the seller when they uh are doing this bidding they plant another one or two people who who then go oh 1100 1200 they they raise the price uh on behalf of the seller okay so artificial part here is that that didn't come from the genuine uh buyer it is a price that is being pushed by way of deceiving others that there is more demand and so they push the price and then everybody thinking this is somebody who genuinely valued this and so it is projecting value and you don't know how that value is now constructed so we enter into that information of symmetry the price goes up but not by way of genuine price there is no transparency there is no like there is something hidden that you don't know man being manip you're being manipulated here and the price goes up and that in for you that indicates this must be very expensive or I know for example people used to uh uh sell something which uh was a course actually happened to be which you can there's nothing there and then they would artificial sell it for $10,000 real case just so that buyers think there is so much value in here and they know there is no value in that okay let me ask you a question there though so that second so I totally understand the first point it's completely dishonest you didn't have two other buyers who are willing to pay five times the initial price or twice what the LA the last genuine person offered um and so what you're doing is distorting the price artifici and that will ultimately end up distorting the market because if I artificially raised the price for my phone and someone bought it for ,000 when you know normally it only goes for2 200 and the next person's going to come along and say oh hanie got you know £1,000 for his phone so I want £1,000 for my phone and all of a sudden you know this the price of the marketplace has changed but that second example so let's say somebody created that cost £10,000 now for somebody who knows what they're talking about they look at the content of that and they say this isn't worth £10,000 or you know it's not even worth £1,000 but this person is free islamically to set the price to whatever they want and the buyer is free islamically if they think it's worth £10,000 to them they can buy it so what's the problem in the in the second one I'm quite interested to explore that yeah so so normally what would uh happen is that yes you can set the price if you want to uh sell something for a million dollar you know but here uh uh what what is happening here is that you are using the price that high price to deceive person and project certain value when you know it's not there and so what you will start then doing is that um and that usually happens in a things that are not standardized that is very hard to judge so something that is is very hard to standardize like for example cup of Co cup of coffee you know it's very hard to say okay I'll sell you this for $10,000 you know this is going to be between $2 and $5 you know maximum okay fancy restaurant $10 nobody's going to pay $10,000 now we find now I don't know you remember in our group the other day uh we show how somebody got banana on the wall and got the tape and Glu the tape banana on the wall and sold it for $6 million right now we could say in Islam you are free to sell fruit at any price right and okay not fruit said this is yeah yeah but I think didn't the person who who bought it I think they ate it didn't they and who bought it who bought it do you know who bought it I I just saw the headline I just I can't even be bothered to look into those articles they make me angry guess the industry they are in do you think it's a a guy do you think this is the guy who is you know goes provide real value in the world charges something realistically provide a value benefit or somebody who is like a clown yeah must it's a clown business it's a crypto he made in the crypto he's just making this another another statement another gimmick and uh I don't want to say in this case but in a lot of these cases these are uh there is other other things that might be going on uh such as money laundering and other other scams that that are in the background happening with lot of this art so-called art when this works because normally this doesn't work uh try sell sell whatever whatever you want for a real price price disclose say or expertise say this is what we going to talk about and see if somebody will do it the thing is whenever you have a clear transparency nobody will buy it for that price so normally then to justify that high price for example you will not see much detail about that course or about that product so they will be they they will uh in the artificial part they will start building that information of symmetry that will be a part of the way to sell you on that because if there is no information symmetry then you will not fall for it so the way that this artificially is built is by deceiving you in some way okay so so this is a very F line yeah I'm I'm really so let's take the coffee example now I can't remember the name of it but there is some ridiculously expensive coffee beans and I remember reading about it and it's like you know goats eat it and then it comes out the other end then they clean it and then it's just like you and and it I can't remember it costs more than gold or something yeah right so so there are people yeah that's it I can't remember what the actual Bean is called but there are people who are willing to pay it's like caviar it's just fish eggs you know like why you going crazy I don't know but so there are people out there and I don't know what the Islamic position is necessarily on this who aren't just buying something for the the value that most of us would see in it just take um designer clothes for example you know I always I ultimately a lot of this comes back down to branding and what I'm buying is status you know if I go around so you know one of the brands I'm not a fan of is like Balenciaga I don't know some of you guys might know right I look at some of the stuff they have on their website they had a bag that everyone was taking the Mickey out of because it looked like a literally like a black bin liner and it was thousands of pounds they had this other jacket I think it was them that looked like the ones the construction workers wear and it's like thousands and thousands pounds but they have people who are willing to pay it because other people will recognize that oh that's Balenciaga that's Armani that's Mercedes that's BMW and just that association with brand means I have a higher status in society and that's what I'm buying um so yeah the the materials cost the same as the cheap one but where does that come into the equation in terms of branding islamically if somebody's allowed to set the price and somebody is free to buy we don't see the value in it I would never wear that stuff but somebody else does yeah that's right that's right so so with these uh it's it's it's very good that you know you push uh because it is important to understand the difference uh so on one side you have as we discussed there is deception which you if you knew you wouldn't buy that if I knew that this person for example who selling me that course he never run a business he is actually providing just uh you know one hour uh it's it's it's it's this exact topic the you know like if I if I know if that is this closed to me would I have purchase this okay so so that sort of artificial or there is a fake demand that is created to deceive you so the idea here on what we are talking about artificial prices is that it comes by way of you being deceived in some way okay now when it comes to the brand uh I would say that this is a little bit different you know that they are deceiving you you know this is the game fakery fakery you know it's a status symbol you are buying it for a status symbol okay the different principle apply here this is a vanity now okay so we enter into another one that we to we talked about this and Quran mentioned that these people who are uh who are like easy spending you know Reckless spender are brothers of Shayan these are the people who are Reckless who are extravagant they go beyond what is normally uh logical now I'll tell you principle of my uh grandfather he used to say I'm not so rich to buy cheap things what he meant to say is that there is no problem buying expensive things quality things you want you buy Mercedes for example because you want a safe good car no problem uh if you can afford it great but once you start going into extravagant things for no reason no reason and spend so this is now different sort of being wasteful so the people who are wasteful just for a status sign symbol I was once explaining uh to my daughter I was listening this podcast there was this lady she was walking down the street she's explaining why she purchased one of these Birkin bags that cost 20 $330,000 some of them up to $100,000 and she was saying the walking down the street and she said NE towards me another lady was walking and she almost run me over she was walking in very confident way and I I almost jumped when I saw how strongly and confidently she's running towards me kind of charging you know walking like a soldier and she was so impressed by this lady attitude demeanor you know and what caught her eyes that she was wearing one of these Birkin bags so she Associated that confidence and success and everything with that bag how how how foolish that is you understand what kind of mindset what kind of insecurities this is what these people play so they are playing with the status and people is buying so they're not necessarily being deceived they're just being foolished so this is where I would separate when you they are also artificialist doing that but that at least you know the game there what is the game here it's it's it's something that is being created uh out of your ignorance where you believe you will get something but you get something else where he you know you you're getting $100 bag that cost $50,000 and you know you're just buying it and you're exactly getting that status and you get the status you see the difference a little bit here yeah absolutely I just would maybe just to explore that a bit further is this idea I was thinking of like vulnerability factors you know that will make somebody more vulnerable to being scam than somebody else and I think Yousef made the point earlier really well that it's not necessarily about how smart somebody is um because you know when you shared the scam in Australia about the land that was on the news you had a surgeon you had Engineers you had people who you know should be very intelligent and you're very surprised how did they you know fall into this trap you'd think they more than anybody would be very you know smart and do all of their due diligence so it's not necessarily about intelligence there is like you say this information asymmetry but then information asymmetry is the nature of the world isn't it like some people have studied something they know more than I do and so if I want to now go and invest and I haven't studied investing um what am I going to do am I going to go and study a degree around investing no I'm going to go and try and find an expert who I trust who is going to do that for me and the issue then comes in the like you said the deception element of it that this person is deceiving you that they know how to invest they might be deceiving you maybe they have had good returns one year but they've been doing this for 10 years you know they're not going to tell you about the other nine years or the other nine deals uh and and so on and I think that you know what's the basic level of knowledge that everyone should have because you can't just blindly trust people and I think that's where because we're looking at this from an Islamic perspective and the Muslim Community is what we do is I don't know this I don't understand this so instead of me going and studying and doing some you know basic reading around this and speaking to some people who really know what they're talking about getting lots of different opinions from people I'm just going to substitute that hard work by the fact that this is somebody who's known in the community and has like a big beard and you know says mallah alhamdulillah and I will substitute that for my hard work and I'm just going to put all my blind trust in them because they're a good person and Allah will look after me except that's completely un Islamic so I thought we could just you know explore that a bit as well excellent excellent question so this is exactly what um uh the type of a discussion and going deeper in the issue that I was hoping that we will explore this um you raised a very good question that uh problem of when we say somebody doesn't know he is a surgeon he's something how did he not know he's educated well education has two components just because he's a surgeon doesn't mean he knows anything about Finance now I say to you I want to sell you this great business gets 10% do you invest how do you frame your mind about what should I know about this what is the truth of it who verifies these kinds of things how many people when they invest in a business invest their money without even know knowing where that money is going and what the profits going to be generated from what is the business activity that it is going to generate that profit I was listening today one of the guys discussing with the Peter schift Economist and the crypto guy and they were discussing how he's investing he's saying Bitcoin has a yield and he was saying to him uh what is the yield from that Bitcoin from what it's it's not yield generating asset you have to trade it to make a yield and he was trying to avoid it by saying as if as if the Bitcoin is apple tree and grows and then you pick an apple and then you have a yield like come on what yield does Bitcoin generate unless you trade it and when you trade it it's a high level risk activity so so just understanding what business you are deriving your profit what is the fruit where is the fruit of your investment coming from that's number one thing and then there is also how do I actually do that due diligence this is one of those uh flags that we'll talk about is this independently audited business do you have necessary disclosures fee structures uh you know uh risks what will happen in the case of a b c d and how do I know what you're telling me is the truth is it just by you saying this or somebody confirms independently do you have a license for doing this job is there a lawyer who can confirm that this is like for example investment every country you go do your investment that person for that country has to have a license by Regulators to solicit investment and those solicitation will be based on whether somebody's uh your mom and dad's simple investor what they call retail or wholesale sophisticated investor who will have a different level of disclosures so these are the kinds of things now there is nothing wrong for this doctor who might say look I don't know anything about this let me get financial advisor planner agent and I pay them and they do the due diligence and everything there is nothing wrong with that they will look they will check somebody's working in a tech he got 5 million he want to invest okay I need somebody to tell me I don't have time I don't know what to ask he's self aware at least he knows that he doesn't know right and this brings us to the second part of this Hadith in the second part of Hadith the prophet sallallahu alaihi wasallam is saying don't go you know to the edge of the town and intercept those who are coming from maybe Village or somewhere and you want to try to sell them something on the edge of the town why is that this reminds us of the of the conversation we said capitalizing on people's lack of education and lack of knowledge that's right and remember we are still talking just about first principle which I suggest is that uh don't engage in business if there is information asymmetry as a buyer seller or investor you need to get to the bottom of things you have to clearly see what is going on again normally can you sell anywhere you want you go set up a shop somewhere you sell it buy you are not limited to one thing especially now online where is my uh buyer coming I'm in Melbourne he is in Sydney London in the village somewhere in Bosnia bokb somewhere you know now do I need to screen just uh online sell people in Melbourne or what what do I need no no it doesn't mean that this is the time when you didn't have a Google and cell phone so people coming to the town from the village and you come to the Mah you come now to the uh beginning of the town and you say why you need to go to the city I'll give you good price how do we know you are giving him a good price how does he know so the prophet wasam said in order to cut these incentives on the system level when you're designing you see this is why Sharia is divine system when it puts the rules it fixs them at the system level also and also at the personal level individual level at the system level you want to remove incentives for people to start setting up these traps how are these traps in the system it's simple because that person doesn't know he cannot verify and so maybe you're telling him false information so you say oh I this is $10 in the city I I'll give you $10 and you don't need to go to the city but maybe in the city it's $20 he cannot check so to AV avoid possibility of fraud deception and in engagement between two parties let him go to the city let him check for himself and then offer an acceptance then supply and demand works now what you want to do also is that let's say you are honest person and you really saying to this person it's $10 and it is $10 and they sell you for $10 but next time in six months he comes and he finds in in the market the price is now 20 what's going to happen he will he will think he was scammed the bad blood so you see Islam at the Deep uh level wants to ensure there is a social cohesion in the community you want to build community where there is a trust cooperation mutual help and so even disclosing the risk disclosing the things that can be taken in a wrong way Islam wants to cut it out you see there is a Nar another narration for this this especially important for the sellers for people who are soliciting investors disclose the risk already that is there uh you see once the prophet sallallahu alaihi wasallam was walking with his wife and this is for the governance for disclosure critical narration uh and uh it was dark so he was walking with his wife and then two companions were walking towards them so they saw the prophet sallallahu alaihi wasallam with a woman so they were kind of uncomfortable they didn't want to make a you know like bit uh embarrassing uh and so they started walking away so then the prophet sallallahu alaihi wasallam called him come come come this is my wife oh this is prophet of Allah you know we would never think anything of it yeah maybe you don't think but has a way you see so there is a possibility that they misunderstand the situation so what is the order of the day transparency be transparent show this is what it is just in case something uh doesn't start creating in your mind sort of a doubt and a fitna okay what are your reflection based on what we are seeing about removing this information symmetry for the system what are you hearing so far I'm reflecting what what you're talking about now if I bring it back to the example I gave um earlier of me uh almost getting scammed if in that if in that scenario the person selling the course would have said this is the results for the percentage of people but this is how many people have have failed or or have tried this program and have not succeeded or at least having an idea of the risk involved in in the transaction and and in that case then I can make a more informed decision um based on on real information I think like adding that transparency and being very clear yes there is a course uh yes you can potentially make money but only 5% of people um actually actually do it and in that case then you are making a more uh more inform decision at least this is like um the uh the learning that I'm I'm getting from this also uh just to comment on that and then let I would like to hear the rest of you the premise of the course is also problematic because the premise is here you will make money you will achieve so the focus seem to be more on your emotional uh playing you emotionally it's not like okay you will learn x y and z you will learn how to actually be a founder of a company how to start a business how to scale it how to do the coding how to uh you know learn the marketing how to learn selling like for example um uh for some of us we have gone to Tony Robins courses for example and uh you know I I I I enjoy his a lot of his content a lot of his courses um he's sort of talking about performance building the business is his course business Mastery he's got a business Mastery course which is $115,000 is that the scam it's not because he brings to the world expert he is teaching you uh how this works how that work it's like University and you know exactly what's happening um sure there is some gimmicky sales and everything but you are getting the top expert you are getting specific topics that they're going to talk about and I have seen a lot of people who have taken these coures over the time um it's a great for them for the business of course not everybody succeed not everybody takes action not everybody does what they supposed to do just like in school somebody will have HD somebody will just pass somebody will fail and so on but here they are not trying to deceive You by some gimmicky words so from the beginning the focus is on what is it that you are getting and they are transparent about what they're getting okay and once it starts getting into this get rich quick playing with emotion and they are it's all about that you will get these outcomes but we don't we are reducing how you know how just like university university degrees are in hundreds of thousands of dollars but you know exactly what you're getting so it's not necessarily about the price you know why it is that much okay it's prestigious University and this is the curriculum fully available to you any other comments on this Omar was gonna say something on yeah uh look my one's uh very very simplistic um my Reflections on this is that this uh asymmetry is a very very good point like the fact that one person or one site has more information than the other but it just makes me think now like in this day and age where we are in social media and and the mass presence of it everywhere that you scroll um you know as I think one of you um said that um I think it was brother Yousef where he was teaching language and then he got a ad that he almost subscribed to to these these ads or or targeted um asymmetry uh basically ads and courses it's just so mass produced at this stage that it's like okay how do we even address this or how do we even um Target and and and not fall uh primitive or scam to this if you could give us advice even if we have education I think some people still fall um victim to these scams even with education because of the amount of targeted ads whether it be through email uh Instagram and so on what do you think about this this bring us to the second point and already Yu hinted at it you need to verify information and how do we verify we go back to the other Hadith where the Prophet sallallahu alaihi wasallam was walking in Medina and he saw a grain seller selling this food stuff so he stuck his hand into inside and he felt there was something vet and he asked what is it he said there was rain and it covered the top so now I put that wet part of the food and put it down and I put dry on the top why did he do that to make it more appealing right but there is another another aspect sure sure appealing right but there is another aspect where is the issue here what what is the issue what's the problem what's the core of the deception what kind of as Sy information of symmetry are we creating now you're not getting you assume that it's all dry yeah yeah yeah exactly you would assume that you'd assume it's all dry right and also because they used to measure things by weight as well will make it heavier in the scale which means you pay more um so the quality might be worse because it's wet because obviously it might then become rotten but also Weight Wise and so you don't know that they didn't tell you that it was wet there's some part of it is wet let me show it all to you and then you can make a decision about how much to to pay for it so think about when Yousef was describing what is the Symmetry he said there is a balance so think about your picture about something in your head and what is reality these are two pictures what you see and what the reality of it do these things match now you have a rotten wet food rotting and so on under which is also heavier on the scale and the bad going to going to get expired very quickly and on the top you now imagine because you are trusting she why did you allow this person why did you certify this but well we saw him in the mosque praying with us a real case scenario one of the scams in Australia I say she he told you like you know do you have a lawyer account to check before you gave HBA and gave him approval but we see him in feder okay then you put on your own neck your own decision because you don't see it so what did the prophet sallallahu alaihi wasallam do did he just trust did he just take it no verify verification is the key Either yourself or somebody even sometimes when it is a simple thing the prophet Salli wasallam would uh tell to some of the companions they used to say we don't know these business things what should I do when I buy and sell and he would advise them to say no cheating to remind person this is the lowest that you can do and then he would advise them in their contract to say there is a option give me option of return after few days similar to what we call today cooling off period you know if I buy Supermarket something doesn't fulfill there is something wrong with it I can return it this for people who are not very good but the best and serious is you need to put your hand and why to put the hand is to see the reality so the prophet sallallahu alaihi wasallam said to that person whoever cheats us it's not from one of us it's not one of us so we see here you need to verify this how do we verify that it's either you do it or you rely on some organization you have an agent you have advisor and then you ask the company how are you registered yesterday one of the Sharia advisor was investigating some firm here in Australia I think they are asking for wi and he was asking to me how they are registered and everything and and I thought you know good good on you you're doing due diligence you start okay what license they have Investment Company okay what are their licensed to do you know what is their governance look like uh you know transparency who does the audit audit is number one that's independently done so you know so you know that what's what is truth you know that's why even I suggest to a lot of these Sharia advisor that start with the governance first so that what you are presented you know it's true before we go analyze it then Sharia compliant don't tell me Sharia compliant and I don't know what you everybody can say this is a fish I'm frying the fish is fish Sharia compliant well how do I know it's a fish you understand and that's why in another Hadith you know the prophet sallallahu alaihi wasallam said it is a bed riding Beast for a man to say they assert they say think of that it's a little bit not commonly quoted Hadith it's a bad vehicle bad principle for a man to say they say they allege such and such what does that mean what do you think it means have you ever had a go ahead I've got I've got four of them so yeah so yeah no you can't just rely on they said that this is good this is bad or I heard so and so say this it's not enough I think this is where people get stuck because I think culturally and also when you don't know people feel very uncomfortable to make the other people the other party feel uncomfortable like oh I'm just going to go to the shop and put my hand in and just be no I want to see what's on the bottom people don't like conflict and I think what people need to get very very comfortable with is having uncomfortable conversations with people oh how does your business work no tell me more I want to know know more there is a sometimes a bit of a culturally people feel shy and they think it's a part of faith that you know we don't ask questions we don't put our hands to check something when we talk about this gas lighting through the religion uh here in Australia we had uh people who were running some charity projects very religious uh and um I know this because I personally dealt with some of these people and they told me this the person who was collecting money taking half in his pocket and for the personal uh uh benefit he used to say to these people and he was religious Authority he said when they he was asked about you know where is the money going he said don't you trust me don't you know in Islam the right hand shouldn't know what the left one is doing and then person stops because they are average person then they you know they they start doubting themsel this how the gas lighting Works they start thinking has a beard right like the the beard and well you know sometimes they beard or no beard yeah yeah sometimes they they have a big hat or a big title or something you know um and the person got confused they say oh my God am I doing something wrong I'm the wrong one so they the backtrack where reality of this principle is that the principle of left hand doesn't know what right is doing is when you're spending your own money you don't want to show off and you don't want to count every dollar so you giving from your own money not when you are agent and giving my money then transparency is the order of a day then you are agent need to be transparent when you give your money you can tell yourself so this is the thing and so and so this idea of this Hadith this being bad vehicle bad vehicle is when men says they assert it's like when your kids come to you you know and they do something wrong and they make mistake and you ask why did you do that and they say well they told me it's okay who is there who told you to do this oh they said it's this how why why didn't you check do you have a brain to check and so I love this Hadith because this uh is uh such a critical uh principle so clear visually that I'll repeat it again it's a bad riding Beast for a man to say they are said it's a bad vehicle why is this the bad because if you have unreliable vehicle it will take you astray if your car is a bad car and you have to take a turn it will take you Offroad you will end up in the wrong place so if you take your life if you go through your life by just trusting people and do because they told you eventually where you will drive your life it will be off road so the verification is the principle and so I would say what are the red flags you know how do you verify basically I would say especially when you are looking for uh Investments or somebody's guaranteeing you something a lot of people say oh high return if it doesn't look good uh it looks too good to be true these camps can be adjusted to look good and reasonable now you know that doesn't mean anything just because it looks reasonable now it's easy to fix those things you know what you want to do is look for disclosure that what you telling me how do I know beyond your words it's true independent audit license what regulates this business activity where is the business regulated especially if it is investment uh uh uh where am I depositing money is it your personal account or your business account what legal rights do I have who is on your board of governance do these people really exist to govern this organization sometimes somebody will put people on the board and I know so many time people ask can you be on my board on this and that we're just raising the money and uh and I say what to be just a token there you raise the money and I don't know why would I lose my sleep I don't know what you're doing I don't want to be used like that so you want active board that know what they're doing they have experience they are not just talken boards on 100 people another thing is you see a lot of people who are non Financial expert uh uh endorsing the finance that's not necessarily red flag sometimes for promotional things but you just have to be making sure just because somebody doing something doesn't mean that they have done the due diligence so you have to do this due diligence in clause just as we started with the Hadith about uh evil evildoer Bad Trader people who cheat and the consequences of that in another narration it is mentioned the prophet sallallahu alaihi wasallam said the truthful honest Merchant is on the day of judgment with the prophets the truthful and the martyrs so this Hadith in itself has some uh weaknesses uh but some say it's Hass um and so the difficult and temptation of being the honest Merchant where if you are honest it is so difficult that your struggle is equal to the Martyr to the honest people to the prophets that you are deserving this kind of award in summary I would suggest to you and would love to hear your uh points as a framework to think about number one on the system level we want to remove information as symmetry and possibility of exploiting others by Design so we always design the market place for information symmetry there is access to information there are disclosures this is why Umar used to have Auditors in the market this is why we have Regulators today regulation Is Not a Bad Thing 2008 financial crisis is was lack of Regulation people were doing crazy things they giving the loans to the people who couldn't afford them they were artificially decreasing the price of those loans that's how they got to the subprime customers those loan that's that's another another way so you know so when you artificially could be artificially also decreasing the price so somebody thinks it's affordable not just to project the price so there's different ways of deception and this is this is in general under the G you know deceiving somebody showing something for what it isn't on the design level we want a regulatory framework that incentivize disclosure from both sides but then we go to the personal transaction level even when you have the market with all of these things you need to verify you still have responsibility yes the system is incentivized but you have to put your hand you have to verify don't rely they told you it's a bad vehicle it's a bad way to live your life just trusting somebody sure you can Outsource that you can hire agent planner advisor whatever who can do that and they are paid from you you pay them never never just go on you know those salese people you know uh these uh sales people who sell you debt who take commission no no pay that's why in Australia now the financial planners are paid yeah I pay you $1,000 give me advice in the past you used to get paid by amount of involve money involved so what they used to do they would load your portfolio with the debt because they get a kickback from before another thing not disclosed to you so I you can't be paid from two parties as agent you are either paid from this side or that side you understand the other day I was talking with somebody and I said to them you know I have a a client and I'm I'm doing some due diligence investment and I wanted this and that and the brother was saying in a good faith nothing wrong he says oh good you know like if there's a deal we'll give you cut I say brother I can't take from you cut I either represent my client or or you I can't take from both sides it's not ethical it's not right then I don't represent him I represent you and he's not getting the good deal and if he doesn't know it's a cheating you understand so transparency if you appoint agent you need to pay pay him there is nothing free if he's giving you free advice or something then then then then he is not working for you so going back to Mak of Shar when we talking about protection of the wealth what does that mean you fix the system but then you bring it down to the transaction and the third thing is if you are the one who is selling seeking investors as we mentioned the Hadith about Prophet saying this is my wife to disclose what's happening to reduce any suspicion or any issue anything disclose the risk in advance so the situation doesn't have to I don't have to ask you on your website put how you are registered put product disclosure statement put what are the risks put information put who verifies who to contact this is the auditor this is how often we provide information this is how we are making money these are the project this is what I would say would be the three ways to think as a consumer or a business in a market whether you are regulator or however side of this equation you are engaging and I will leave it to you maybe if you have any uh last comment about about it I'd say that go on pleas no no no you please yes so just my I would end with my my my my personal opinion on all of this I think every Muslim now nowadays um especially if they have money especially if they want to uh if they are serious about having Halal Halal money they need to have some Financial education as well money is extremely important in Islam um and we have access to uh almost always free education um and everyone is uh has the responsibility of having at least the basic concepts of what is Halal and what is Haram so you need to understand what makes transactions Halal what makes transactions Haram you need to understand this basic concept all everything that we've been talking about today uh this is a in my personal opinion this is a this is a must as soon as I became an adult and started making more money that I could spend this is the first thing I was thinking about how can I learn uh uh the basics of investment from an Islamic perspective what does Islam say about this what does Islam say about that if I put my money in stocks is it Halal or Haram if I put my money in real estate what is uh what is the the benefit for society how to understand economy Etc uh and uh it it doesn't uh take too much of your time just a little bit here and there you will inshallah get certain knowledge that will help you both in the and the and I will end by again encouraging people if they haven't so if they are watching us to join our uh Muslim Money Matters uh Community um there are courses uh excellent courses from Amir but also the conversations if you have questions you can ask them if you are unsure about something you can find experts as well in certain Fields so everything we've been talking about these are things that um we are engaging in uh and inshallah for all of this for the sake of of having uh Halal money not getting scammed uh preserving our money and making sure that uh we are always the we have the upper hand I was just going to add to that really quickly and just say you know what instigated this podcast discussion were some things that have happened in our community some people will be you know familiar with those so scams are out there and we all need to of course of course no one saying don't do you should definitely pray like every but you also have to be prepared to put in the work and if you're not prepared to put in the work then don't do this you want to invest your money be prepared to do some research find people speak to people nothing comes for free maybe I'll just ask a question to wrap this up I think we discussed definitely that it's a shared responsibility you have to verify as a consumer and the and on the other side as a service provider or um the product seller you have to also um apply certain guidelines but I think there's a current movement towards um like a feeling of if you don't really have figure things um in a different way or find a way around the current system you're not doing it the right way I think this is a common um feeling that I personally as a as a young person I have uh for example I see many business owners um that would judge people based on this so they they would say if they don't really have a way around it they're probably not that not that good in their business so I think to the people who um are selling to the people who are engaging in in such business activity what would you say uh as an advice to to those people in in the very common Trend nowadays that you have to find a way around the system I think the if I'm understood you correctly that the burden of actually selling and putting the product out there that people are actually buying and consuming and uh uh this comes to the point of what is the marketing that is then permissible do we just put a product and say this is the car and if you want to buy it you know or do we still try to communicate something right there is a place to project a real value uh what you're trying to do promote your car or product in a way that does not deceive people the fact that you have such a wealth of information principles that you need to pause to digest just one thing uh to show you the power of how sometimes we look at this oh Islam says protection of the wealth is the core aim of the Sharia you know and we just dismiss it as a not a miracle by itself but then when somebody else says that who is now biggest investor known for things when he says that oh wow it's a great thing it become a principle of investment you know who I'm talking about right I sh Buffet this that's right that's right Warren Buffett one of the greatest investors actually when you read this book uh how his investment philosophy is is to build businesses invest in businesses because they have great management they they produce products that easy to understand they understand the business and so on of course he has his own ethics how to screen it but what is the number one rule of business that he used to say the first rule of investment is don't lose money no don't lose money I thought you were going to say I don't invest in something that I don't understand that's that's a general rule yes something too complicated so he would invest in things like drink uh chewing gum you know so the first rule of investment that he say is don't lose the money protection of the wealth what do you think think is the number two rule make money don't don't forget the first rule and that's what we are doing and this is my message as well uh if you don't understand sometimes people ask me I have this business this but I have to okay I don't have this information what do I do now nothing you don't do it if you don't have information if there is clearly picture is not complete for you you can't form a picture nobody to help you don't do it like a n think of Nike and do opposite just don't do it because the first rule is don't lose the money value your agency and that is in line with that other Hadith because investing by not knowing is that vehicle that will take you off the road you see this is how it comes don't be a foolish person reckless in your work I think we should clarify that though so when we say don't lose money that doesn't mean don't take risks sure because if someone tells you they're going to make you money without any risk that's a red flag you know so uh yeah that's not what we mean by don't money abely absolutely absolutely uh uh losing money here is this what we said before is when you have certain gaps when there is a certain risk that you cannot justify or you don't understand or is a result of certain deception uh he himself was a risk taker so but he takes the calculated risk a risk that he can understand justify so when you take take on the risk that's why a good in uh planner when you have uh he will um give you investment based on a risk appetite that you have so the risk is based on your appetite somebody who is in a pension will have different risk appetite as a om for example young man so he might take more risk because he has a time to make it up somebody who is now investment grandfather he's not going to take he's not going to invest in something you know which would wipe his he doesn't have a time to make it up it's it's a matching that risk uh but being Reckless and risking it on on blind this is a different thing right going turning right but you didn't check the blind spot now you are doing something that will get you in trouble uh thank you very much for your patience uh inshallah maybe we do uh from time to time this topic we see how people like maybe the people fall asleep I don't know maybe they don't listen Until the End uh and then we'll see inshallah uh but thank you may Allah reward you and until next time Salam Alayah thank you for spending time to watch this video if you would like to learn more about finance and economy from Islamic perspective head to our new platform Muslim Money Matters where we go in much greater details regarding the content until next time my name is Ali chanam alikum

In this video, we explore key concepts like information asymmetry, the importance of due diligence, and recognizing red flags in financial dealings. Learn how Islamic principles can help you avoid scams and financial traps. To learn more about Islamic finance and economy and to support MMM in producing future financial literacy videos like this, consider becoming a member of our Muslim Money Matters platform. 🌐 Join us at https://www.muslimmoneymatters.com 📲 Connect with Almir on social media: 🔗 Links: https://www.almircolan.com/links 📩 Subscribe to Almir's email updates: 🌍 Website - https://www.almircolan.com