1. www.AlhudaUniversity.org Interest-Bearing Transactions in the U.S. Dr. Main Al-Qudah Assistant Professor

2. www.AlhudaUniversity.org War against Allah SWT  The only sin in the Quran in which Allah (SWT) and His Prophet (PBUH) are declaring war against those who commit it.  ( فإن لم تفعلوا فاذنوا بحربٍ من الله ورسوله )

3. www.AlhudaUniversity.org Curse from Allah and His Prophet  Allah (SWT) and His Prophet (PBUH) curse those who are involved in usurious transaction.  ( لعن رسول الله صلى الله عليه وسلم اكل الربا ومؤكله وكاتبه وشاهديه،وقال : هم سواء )  Taking Riba and giving it to others are the same !even witnesses and the one who documents the usury are cursed too !

4. www.AlhudaUniversity.org Major sin  Dealing with Riba is one of the seven major sins, where the Prophet (PBUH) was warning His nation from committing them:  اجْتَنِبُوا السَّبْعَ الْمُوبِقَاتِ قَالُوا يَا رَسُولَ اللَّهِ وَمَا هُنَّ قَال الشِّرْكُ بِاللَّهِ وَالسِّحْرُ وَقَتْلُ النَّفْسِ الَّتِي حَرَّمَ اللَّهُ إِلا بِالْحَقِّ وَأَكْلُ الرِّبَا وَأَكْلُ مَالِ الْيَتِيمِ وَالتَّوَلِّي يَوْمَ الزَّحْفِ وَقَذْفُ الْمُحْصَنَاتِ الْمُؤْمِنَاتِ الْغَافِلات

5. www.AlhudaUniversity.org Difficult to avoid  American's economy is a Capitalist economic system in which Riba is a built-in pillar in this system, and structured in a way that it is hard to avoid.  Difficulty of having balance between living in America, conducting business, transacting from one side, and avoiding Riba from the other side.

6. www.AlhudaUniversity.org No excuses  However, living in a non-Muslim country does not allow Muslims to be involved in any usurious transactions.  The difficulty of avoiding Riba can NOT be taken as a justification to permit it, because it could be avoided.  Transacting with Muslims or with non- Muslims in usurious transactions are the same, both are prohibited.

7. www.AlhudaUniversity.org Transactions at a glance 1-Bank Loans 2-Late Fees or Charges 3-Credit Cards (unsecured cards) 4-Security deposit credit card 5-Debit Card 6-Saving Account

8. www.AlhudaUniversity.org 7-Checking Account 8-Financing 9-“lease to purchase” option. 10-Charging an employee when withdrawing from his 401(k) plan 11-Investing In (401)K Plan

9. www.AlhudaUniversity.org 12-Buying a house via conventional mortgage 13-Late registration fees 14-Status of money generated through usurious transactions before repentance.

10. www.AlhudaUniversity.org 15-Monetary Gifts 16-Non-Monetary Gifts 17-Saving Plan 18-Cashing checks 19-Warranty purchases

11. www.AlhudaUniversity.org 20-Facilitating prohibited transactions for non-Muslim customers. 21-Distance Forex and foreign currency trading. 22-Membership fees. 23-Student loans.

12. www.AlhudaUniversity.org 1- Meaning of Usury (Riba)  Usury (Riba) in Arabic lexicography: Excess, addition, increase,to add. Example from the Quran ” ويربي الصدقات “  In Islamic jurisprudence: increase or delay in specific assets (liquid or non-liquid) in specific transactions. الزيادة أو التأخير في أموالٍ محدودةٍ في معاملاتٍ محدودةٍ

13. www.AlhudaUniversity.org 2- The two kinds of usury: A - Riba of increase ربا الفضل : Increase awarded to one party in a sale, service, exchange, or loan contract without providing any equivalent consideration to the other party. Or “When the amount paid back exceeds the original debt or, gaining any benefit out of the debt”

14. www.AlhudaUniversity.org 2- The two kinds of usury: B - Riba of delay ربا النساء : Delaying the submission of particular items in the sale contract. Or “ When the payment is delayed or deferred after its due date”

15. www.AlhudaUniversity.org 3- Usurious Transactions Interest-bearing transactions might occur in only two different transactions in Islam:  Loan contract عقد القرض  Sale contract عقد البيع

16. www.AlhudaUniversity.org 4- How Does Usury affect the Loan Contracts ? A-Riba of increase: If the lender stipulates extra money by the borrower-either when he pays on time or when he delays his payment--this is “Riba of increase ربا الفضل ”. This includes even the stipulation of providing help, service, a gift, food or anything because of the loan - A well known rule: “any loan that derives stipulated benefit is usury.” كل قرض جر نفعا فهو ربا

17. www.AlhudaUniversity.org 4- How Does Usury affect the Loan Contracts ? Cont. B- Riba of delay: If the borrower delayed his payment after receiving a loan, this is Riba of delay. But since the purpose of a loan contract is to help others, and it’s among non-profit contracts ( عقود التبرعات ) where profit is not intended, as in “charity, lending, will …” contracts; this kind of Riba is exempted and absolutely lawful. Rather the lender is anticipated to be rewarded because lending to others is an obedience and a good deed.

18. www.AlhudaUniversity.org 5- How Does Usury affect the Sale Contracts?  Usurious sale is limited to two items only: money and food.  To avoid interest, the following conditions must be satisfied: A- Trading in the same category and the same item, like rice for rice, wheat for wheat, American dollars for American dollars and Jordanian dinars for Jordanian dinars. There are three conditions:

19. www.AlhudaUniversity.org 5- How Does Usury affect the Sale Contracts? Cont.  Equality التماثل : It should be the same amount, to avoid Riba of increase.  Mutual Submission التقابض : It should be exchanged at the same time, to avoid Riba of delay.  Finalization “ الحلول ”: The completion of the transaction without deferring to the future (in other words, it has to be effective immediately).

20. www.AlhudaUniversity.org 5- How Does Usury affect the Sale Contracts? Cont. B- Trading in the same category but with different items: like rice for sugar, American dollars for Jordanian dinars, etc. This has to satisfy two conditions: - Mutual submission التقابض “” - Finalization “ الحلول ” Equality is not required.

21. www.AlhudaUniversity.org 5- How Does Usury affect the Sale Contracts? Cont. C- Trading in the two different categories (money and food): Like American dollars for rice, Jordanian dinars for sugar, etc. Only one condition must be satisfied: At least one of the two items must be submitted during the contracting. نهى رسول الله صلى الله عليه و سلم عن بيع الكالئ بالكالئ

22. www.AlhudaUniversity.org 5- How Does Usury affect the Sale Contracts? Cont. D- Trading in a non-usurious assets: In this case, at least one of the two assets is a non-usurious asset: “A car for a house, a house for a land, or money for a house.” There is one stipulation: one of the two items must be submitted while contracting for the same reason mentioned above, which is the prohibition of contracting without submitting one of the traded items.

23. www.AlhudaUniversity.org 5- How Does Usury affect the Sale Contracts? Cont.  If any of the aforementioned conditions are not completely fulfilled, then the transaction is an interest-bearing contract, and it’s definitely prohibited.  Usurious sale “ ربا البيع ” is less common today than it was before.

24. www.AlhudaUniversity.org 6-Different levels of prohibition  Usury of increase ( ربا الفضل ) is less prohibited than the usury of delay. It is prohibited because it leads to the usury of delay ( ربا النسيئة )  Usury of delay ( ربا النسيئة ) is prohibited by itself.  قال صلى الله عليه وسلم ” لا تبيعوا الدينار بالدينارين ولا الدرهم بالدرهمين ولا الصاع بالصاعين فإني أخاف عليكم الرما “  والرما في الحديث هو ربا النسيئة

25. www.AlhudaUniversity.org 7-Status of loan in Islam  It is NOT a mode of finance.  It is advanced only for charitable and cooperative purposes.  It is guaranteed by the borrower.  The lender is NOT entitled to any profit or interest.  Asking for a profit will convert the lender into a business partner.  In this case, the loan is not guaranteed.  Guaranteeing the loan & its profit is Riba.

26. www.AlhudaUniversity.org 8-Why Islam prohibits Usury?  If the debtor suffers a loss, it is unjust for the creditor to claim a fixed rate of return.  If the debtor earns a very high rate of profit, it is unjust for the creditor to take a small proportion of the profit.  It is unjust that the borrower guarantees the loan & its profit for the lender.  The lender did not exert an effort to be entitled for the profit (interest).  Usury and injustice are synonyms !!

27. www.AlhudaUniversity.org Practical Examples 1- Bank Loans: Borrowing with a predetermined lump sum or percentage to be paid by the borrower is an interest- bearing loan. The prohibition of this kind is declared in the Qur’an and the Sunnah. ” يا أيها الذين امنوا اتقوا الله و ذروا ما بقي من الربا إن كنتم مؤمنين “ ” لعن رسول الله صلى الله عليه وسلم اكل الربا، وموكله ، وكاتبه،وشاهديه،وقال هم سواء “ Borrowing a personal or a business loan are the same.

28. www.AlhudaUniversity.org 2- Late Fees or Charges: Any late fees paid out of a loan, utility bill or service, deferred payment sale, payment plan (paid on monthly basis) is riba. A Muslim must make sure to pay on time to avoid involving himself in any interest- bearing activity.

29. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): a- Definition: A credit card is a contract between a credit company and a client that allows the client to borrow money either by withdrawing cash, or using the card to pay bills as well as make purchases.

30. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont. b- The contract-some times- indicates the obligation of paying extra money by the client in case of:  Delayed payment (one time payment after the due date).  Payment plan (on a monthly basis / installment). The above 2 charges are Riba. Agreeing to pay these charges is prohibited.

31. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont. c- Another justifiable charges, like:  Purchasing from over-seas (out side the unites states).  It could be: money transfer, or currency exchange’s profit.  Cash withdrawal (when withdrawing from the ATM machine of the credit company).  It could be: service fees.

32. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont. d- Scholars differentiate between two kinds of prohibited matters:  حرام لذاته prohibited by itself, like paying riba for others, taking it from others, adultery, drinking alcohol, etc.  حرام لغيره prohibited because of its consequences, like agreeing to pay late fees (without paying it yet).

33. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont. e- The reason behind this classification is that: الحرام لذاته تبيحه الضرورة، والحرام لغيره تبيحه الحاجة whatever is prohibited by itself would be permitted in case of necessity, while what’s prohibited because of its consequences becomes permissible in case of true and public need.

34. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont. f- Considering the above rules: - “Credit card” is a true and public need to build credit history & to facilitate daily transactions. حاجة عامة - Extra charges (Riba) could be easily avoided حرام لغيره

35. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont. g- Based on the above conclusion, having a credit card is permissible: للحاجة شروط دفع الرّبا من الحرام لغيره فيباح Conditions for that permissibility:  Living in a country where credit cards are direly needed.  Paying off the due balance (in full) before the due date  No installment or payment plan.

36. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont. h- When it comes to annual fees, then these fees are considered as a service charge, because it is not affiliated with using the credit card. So it is allowed to pay it. i-Some credit companies charge a percentage even without delaying the payment. Having a credit card through these companies is prohibited.

37. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont.  J -Paying service fees for (cash withdrawal) from any ATM machine does not belong to the same credit company of the client is permissible, because the new company is not the lender of the client (the borrower in this case), rather they save his time by withdrawing the money on his behalf from his original company. Charging him because of this service is allowed.  ( عقد وكالة أو جعالة )

38. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont.  K- A credit company does not pay the full amount to the merchant when its client uses his credit card for purchasing, it deducts(1 or 2%) justified as a (service fee).  The above is one of the ways credit companies make money.

39. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont.  Since the three parties (the merchant, the client, and the credit company ) know and agree on that in advance,and this deduction is in the opposite of usury, then it is lawful.  Deducting a lump sum or a percentage is the same, both are permitted.

40. www.AlhudaUniversity.org 3- Credit Cards (unsecured cards): Cont.  L- Balance Transfer: Transferring debt from one credit company to another is a chargeable service. The new company would charge the client (0% APR) for the debt, but there is a transfer fee. This fee is NOT Riba even though the new company is the lender and the paid-back money exceeds the original debt. This extra money could be justified as the real (transfer fee) of the money from one company to another. It is preferred to be a fixed amount and not a percentage of the total transferred amount.

41. www.AlhudaUniversity.org 4- Security deposit’s credit card (secured card): a- It’s a credit card, the only difference is that it is issued for those who don’t have sufficient scores or do not have a credit history. The same rules applied for non-secured credit cards are applied here. b- A client might receive extra money (interest) with a deposited amount without taking his permission after the expiration of his secured credit card. This extra money is Riba. - The rule in this case is that the extra money should be spent for Muslim public benefits (Masajid, Islamic schools,… etc.)

42. www.AlhudaUniversity.org 5- Debit Card: a- An easy way to withdraw from the client’s checking account. b-Annual fees are allowed. c- Service fees for withdrawing cash are allowed too.

43. www.AlhudaUniversity.org 5- Debit Card: Cont. d- Using it is allowed as long as the depositor has sufficient funds. e - Withdrawing via debit card without having sufficient fund would result in an overdraft charge, where the bank would pay the money on behalf of its client,and then charge him the original amount plus the (over draft charge), which is Riba.

44. www.AlhudaUniversity.org 5- Debit Card: Cont.  (Overdraft protection) is a paid service provided by the bank to prevent the client from any overdraft charges when withdrawing while having insufficient fund.  No need for this service when checking your balance daily.  However, it is allowed.

45. www.AlhudaUniversity.org F-Multiple card (Credit and debit):  Basically, it is a debit card which can not be issued for those who do not have checking account.  It helps delaying the payment if it is used as a credit, as will as allowing the purchaser to use it in any point of sale where debit cards are not accepted.  It has the same rules of the debit card.

46. www.AlhudaUniversity.org 6- Saving Account: a- A pre-determined percentage of interest is given to the client when opening such an account. b- This percentage is Riba, and it’s unlawful. c- Spending this extra money for Muslim public benefits does not change the rule because of the absolute prohibition of such a contract, regardless of the pre-intention of getting rid of this prohibited extra money.

47. www.AlhudaUniversity.org 6- Saving Account: Cont.  D- Protecting money against (Identity theft) could not legitimize having a saving account.  The alternative is to have another checking account without using it for purchasing or paying bills, only to save the money.  Using the new checking account will publicize its information, and eventually being subject to Identity theft.

48. www.AlhudaUniversity.org 7- Checking Account: a- A public need to secure money and facilitate daily transactions. b- Usually, banks use a percentage of the deposited money to lend to other clients with interest and without taking the permission of the account holder.

49. www.AlhudaUniversity.org 7- Checking Account: Cont. c- Indirectly, all account holders help banks to conduct interest-bearing activities. But because of the need and lack of a viable Islamic substitute, having a checking account is permissible. d- A Muslim client should make sure to have interest-free checking account, since some banks offer interest even on the checking account.

50. www.AlhudaUniversity.org 7- Checking Account: Cont. d- In case of having Islamic banks, a Muslim is prohibited from having a checking account in any conventional bank, ومن يشفع شفاعة ً سيئة ً يكن له كفل ٌمنها meaning, “Whoever intercedes in conducting bad deeds,will share in its punishment.“

51. www.AlhudaUniversity.org 8- Financing a- Offering two different prices for the same commodity based on the duration of the payments is permissible, as long as the two parties come up with an agreement on one of the two prices. b- This permissibility is stipulated with three conditions:  The two parties have to agree upon only one of the two options.  No third party is allowed to finance.  No late fees are allowed.

52. www.AlhudaUniversity.org 8- Financing cont. c- Purchasing through a third party in the conventional financial institutes U.S means that the third party—i.e. bank, credit company, etc. would pay the amount on behalf of the buyer and eventually charge the original amount plus a percentage. This transaction is an interest- bearing loan. d-Car Dealership & Finance Department of the same company (i.e. Honda or Toyota) are two different entities. For instance; if one of them filed for bankruptcy, the other one will keep operating normally.

53. www.AlhudaUniversity.org 8- Financing cont. e- Buying through a (0%APR) finance is permissible. It means that the client is borrowing a free of interest loan. f- Even in case (0% APR) is not available, Riba could be avoided by paying a down payment to make it (0% APR). Eventually, it becomes permissible. Another solution is capitalizing the interest

54. www.AlhudaUniversity.org 8- Financing cont. g-Late fees are Riba as long as the price is determined and agreed upon. If possible; Muslim clients should find another provider with no late fees. If he can not find any (which is most probably the case), he can buy and avoid late payment by paying on time.

55. www.AlhudaUniversity.org 8- Financing cont. h- Floor Plan: It is a line of credit provided by the whole sale dealers to the retail dealers, allowing them buying cars on a deferred payment basis. Retail dealers have to pay interest based on the number of days spent before selling the car. This is Riba.

56. www.AlhudaUniversity.org 8- Financing cont.  Possible solution : Increasing the price from the beginning while agreeing on delaying the payment for a specific time (deferred payment sale). Example: Paying $3300 after 90 days instead of $3000 after 45 days.

57. www.AlhudaUniversity.org 9- Car purchase through a “lease to purchase” option Some car dealers lease a car for a specific duration and give the priority for their clients to purchase at the end of the lease contract. The price of the car is pre-determined and agreed upon in advance. This transaction is lawful, since (lease contract) is not subject to Riba.

58. www.AlhudaUniversity.org 10-Charging an employee...when withdrawing from his 401(k) plan before due time (disability, death, or retirement) to spend or invest. Two different ways for that: 1- Taking an interest bearing loan. The interest is to be paid for the investment company (Fidelity for instance) # This transaction is not a loan because the employee withdraws from his own money. But it is called so for a legal Tax evasion purposes. Eventually, it is permissible.

59. www.AlhudaUniversity.org 10-Charging an employee cont. 2- Withdrawing from his own account. In this case, he will be incurred a penalty #The charged amount will be added to the employee’s account. In another words, he pays the money from himself to himself. No interest seems to be involved in this transaction.

60. www.AlhudaUniversity.org 11-Investing In (401)K Plan Employees have the right to choose from different categories of investment, they can be: 1. Stable Value Fund ( saving account), (certified deposit) 2. Balanced Fund (50% stocks,50% bonds) 3. Aggressive stock Fund 4. International Stock Fund 5. Emerson Stock as a part of the Employee Stock Ownership Plan (ESOP)

61. www.AlhudaUniversity.org Restrictions:  Any guaranteed profit is not allowed (Like stable value fund and bonds )  Possession or even transaction with stocks of companies who conduct prohibited business (Obscene,Alcoholic, Tobacco,or Gambling materials, conventional bank, casino, mortgage company, musical Instruments, etc..) is prohibited.  (Socially responsible fund) companies might help in determining companies who conduct lawful business.

62. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage : a- Any conventional mortgage contract is a combination of 3 different transactions:  Sale contract: Where the client buys the house for the landlord.  Loan contract : Where the mortgage company pays the price of the house to the landlord on behalf of its client and then charges him the original amount plus a percentage on a long term basis.

63. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont.  Mortgage/Lien contract : Where the mortgage company holds the title (deed) as a (Lien holder) to secure their money. b- Only the loan contract of the above transaction is the prohibited one, since it is the exact Riba mentioned in the Qur’an, Riba of loans “ ربا الديون ” c- To permit such a contract, the bank should buy the house, write its name on the title as an owner, and NOT as a lien holder, assume the risk of any possible damage, and completely own the property.

64. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont. In a different, independent, and non-stipulated contract, the bank can sell the house to the client, نهى رسول الله صلى الله عليه و سلم عن بيع ما لم يقبض و عن ربح ما لم يضمن meaning: “Selling a commodity before possessing it is prohibited and gaining profit without assuming the risk is prohibited too.”

65. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont. d- Foreclosed Houses: - No third party involved to finance. - The bank/mortgage company repossesses the property after the default of the client in paying the mortgage. - The bank sells the house to the new client by lending him an interest loan to pay off the price on a long term installed payment.

66. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont. The transaction is permissible under the following conditions:  The bank has to legally own the house, and the house has to be in the bank’s collateral.  The financier and the seller must have the same entity.  No independent third party can be involved for financing purposes.

67. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont.  The loan has to be strictly for the purpose of buying the same house that is in question.  The buyer or client must not be given the freedom to use the loan for any purpose other than buying the house.  The client must not acquire this loan, and must not be under his collateral.

68. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont.  Members of AMJA fatwa committee has different opinions regarding the foreclosure issue:  Allowed under the above conditions.  Not allowed because of the interest- loan associated with the sale contract.  Want to further research this matter before taking a stand.

69. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont. e- AMJA Fatwa committee does not agree with the fatwa of The European Council for Fatwa and Research, declaring the permissibility of buying houses via conventional mortgage process for residential purposes. f- No necessity exists to buy a house in the U.S, even for residential purposes. The only necessary thing is to find a place/domicile to live in, safely and securely, which could be achieved through renting a house.

70. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont. g-Failure in paying the mortgage payment would result in terminating the contract, consequently, the house will be lost! Buying is like renting in this regard. So, buying a house does not secure the future of the children, or even the parents.

71. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont. h- In case of lacking the ability of the following:  Renting an apartment because of having a big household.  Renting a house because of the high expense.  Increasing one’s income or having an over- time work to afford renting a house.

72. www.AlhudaUniversity.org 12- Buying a house via conventional mortgage: Cont.  Moving to another state/ country for a better situation.  Finding an Islamic finance to buy a house.  Support from the Muslim community to find a solution. Then; buying a house via mortgage process will be permissible.

73. www.AlhudaUniversity.org 13- Late registration fees: a- Some academic institutions offer three options of payment for the students:  Discounted fees for early registration;  Regular fees for on-time registration;  Late fees for late registration. b- All three options are allowed since no contract or agreement has been done yet.

74. www.AlhudaUniversity.org 13- Late registration fees: Cont. c- The only case where late fees are prohibited is when the fees are already determined based on one of the three options, and the institute charges the client a financial penalty because of his late payment, Or when the monthly payment is agreed upon and there is a penalty (late fees) for delayed payment.

75. www.AlhudaUniversity.org 14-Status of money generated through usurious transactions before repentance. Two different cases : A- Previous transactions Example: 1-Due to a market demand; making profit when selling one’s house that was bought through mortgage is allowed. 2- Keeping the wealth gained from unlawful resources is allowed too. 3- Only other people’s rights must be returned.

76. www.AlhudaUniversity.org 14-Status of money generated through usurious transactions before repentance. Cont.  فمن جاءه موعظة من ربه فانتهى فله ماسلف و أمره إلى الله Meaning, “So whomever receives an admonition from his Lord and stops taking Riba shall not be punished for the past, his case will be judged by Allah. But whomever returns to Riba, such are the dwellers of the fire.”

77. www.AlhudaUniversity.org 14-Status of money generated through usurious transactions before repentance. Cont. B- Current transactions It is not the case if a Muslim is a lender who has an on-going usurious loan. Repenting in this situation must prevent him from taking any extra money over the original debt. ( وإن تبتم فلكم رؤوس أموالكم لا تَظلِمون ولا تُظلمون ) Meaning (…and if you repent, then you should take back your capital only, without oppressing others or being oppressed by them).

78. www.AlhudaUniversity.org 15- Monetary Gifts Examples:  A store refund of $20 when purchasing a minimum of $300;  A $50 credit when opening a new bank account.  The above examples (and many more) are in the opposite of Riba  They are justified as promotion/ special offer, gift ( هبة ٌ مشروطة ٌ )  Taking advantage of this offer is permissible.

79. www.AlhudaUniversity.org 16-Non-Monetary Gifts  Air mileage with minimum amounts of purchasing.  Gifts when purchasing from a store /opening a bank account.  Entering into a lottery (Raffle ticket ) to win a car when purchasing with minimum amount.  “Buy one, get one free.”  Using a coupon with the discount.  The above examples (and many more) are in the opposite of Riba.  They are justified as promotion/ special offer/ gift ( هبة ٌ مشروطة ٌ )  Taking advantage of this offer is permissible.

80. www.AlhudaUniversity.org 17- Saving Plan Savings plans offered by credit companies when subscribing that includes a monthly fee and discounts for purchasing at specific stores.  This transaction is not like the previous one. The customer here must pay a monthly fee to take advantage of this offer.  Because of the inequality of the money exchanged, this transaction is not allowed.

81. www.AlhudaUniversity.org 18- Cashing checks A percentage or lump sum is charged for the check holder when cashing a check.  Many contemporary scholars consider this transaction as a currency exchange. They declare the impermissibility of such a transaction because of the inequality of the money exchanged.  However, this transaction could be interpreted as a (chargeable service).

82. www.AlhudaUniversity.org 18- Cashing checks Cont.  According to this description, charging for cashing checks is allowed.  To be in the safe side, it is better to cash the check first, submitting the whole amount back to the client, and then,he can charge his client.

83. www.AlhudaUniversity.org 19- Warranty purchases  Warranty is a kind of commercial insurance.  It is different from the governmental or the cooperative one.  There is a semi-unanimity between contemporary scholars & Fiqh Councils regarding the prohibition of any kind of commercial insurance.

84. www.AlhudaUniversity.org 19- Warranty purchase..Cont  Commercial insurance is prohibited for the following defects: 1- Ambiguity: The occurrence of the incident is not confirmed الغرر : ما لا يُعلم حصوله من عدمه  Gharar of existence: non- existent items/merchandise/commodity cannot be traded in  Gharar of time limit in case of having a payment plan.  Minor Gharar is tolerable, while the major one is not.  Gharar in insurance is a major one.

85. www.AlhudaUniversity.org 19- Warranty purchase..Cont 2- Uncertainty: The occurrence of the incident is guaranteed, but details are unknown. الجهالة : ما عُلم حصوله وجُهلت صفته When the client knows for sure he will be compensated, but does not know the quantity or the quality of that compensation. 3- Riba الرّبا For the life insurance only: The premium is much less the compensation.

86. www.AlhudaUniversity.org 19- Warranty purchases Cont.  Exceptions:  If the warranty is included in the item purchased for no charge, then the transaction is permissible.  Even if the warranty is optional and included in the contract for a fee, it’s also permissible; for a well known maxim:  ( يغتفر في التابع ما لا يغتفر في غيره )  (The void transaction is overlooked if it is a part of another valid transaction).  If the warranty offered in an independent contract, then it is not allowed because of the reason listed above.

87. www.AlhudaUniversity.org 20- Facilitating prohibited transactions for non-Muslim customers  Example: A Muslim car dealer would connect his non-Muslim client to any credit company or conventional bank for financing.  A Muslim should not be involved in any usuries transaction.

88. www.AlhudaUniversity.org 20- Facilitating prohibited transactions for non-Muslim customers Cont.  In our example, a Muslim dealer should verify and provide all needed information to the bank to proceed with the sale.  The aforementioned is an explicit involvement in Riba, where a Muslim should avoid.

89. www.AlhudaUniversity.org 21-Distance Forex, or: foreign currency trading It could be done either online or through a third party (Bank or commissioner)  Immediate mutual submission is a condition for the soundness of currency exchange in general.  Both of the two methods mentioned above (Online and through a third party) do not fulfill the above condition, providing that wiring the traded money will take some time.

90. www.AlhudaUniversity.org 21-Distance Forex and foreign currency trading Cont.  The above transaction is allowed under the following stipulations : A) No intentional delay. B) The traded money should be in its new owner’s collateral. C) The whole traded amount has to be paid in full. (paying only 10% {leverage} is not allowed)

91. www.AlhudaUniversity.org 22-Membership fees  It gives an access or subscription to some stores or businesses. (Sam's club,…)  It is not connected with the actual use of the service.  As long as the service provided is not a loan ( they do not lend money to their members), then it is permissible.  Whatever is paid back by the store as a discount (for business members) is allowed too.  It is justified as incentive or promotion.

92. www.AlhudaUniversity.org 23-Student loans  In the United States, there are two different kinds of student loan: A- Subsidized Loan The government pays the interest on the loan while the student is in school, during the six- month grace period, and during any deferment period. Subsidized loans are awarded based on financial need.

93. www.AlhudaUniversity.org 23-Student loans Cont.  B-Unsubsidized Loan: An unsubsidized loan is a loan for which the government does not pay the interest. The borrower is responsible for the interest on an unsubsidized loan from the date the loan is disbursed, even while the student is still in school. Students may avoid paying the interest while they are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need.

94. www.AlhudaUniversity.org 23-Student loans Cont.  Subsidized loan is allowed as long as the student: 1- Tried all other options: grants, scholarships, financial aids, and work study. 2-Needs the loan. 3 -Pays the loan back during the grace period. Failure in paying in full before the due date will convert the loan into an interest-loan from the date the loan was disbursed

95. www.AlhudaUniversity.org 23-Student loans Cont.  As of the unsubsidized loan, its default rule is the prohibition, since it is an interest- based loan.  However, it is permitted if it is the only way for Muslim students in the west to pursue their degrees.  Higher education in the west is a necessity based on the following definition:

96. www.AlhudaUniversity.org 23-Student loans Cont.  الضرورة : ما يلحق المكلّف ضررٌ بتركه ولا يقوم غيره مقامه  Necessity: What lacking it causes harm, and has no substitute.  The above is different from the traditional one:  بلوغ الإنسان حدا ً إن لم يتناول الممنوع هلك أو قارب  Reaching a situation in which refraining from eating what is prohibited ruins one’s life, or most likely causes so.

97. www.AlhudaUniversity.org 23-Student loans Cont.  AMJA has an official declaration in this regard:  The default is the forbiddance of interest- based loans regardless of whether these loans are for students or otherwise due to it falling under the clear interest that the scholars unanimously agreed, past and present, on its impermissibility. It is incumbent that all efforts are spent in finding permissible alternatives before leaping to the justification of urgency or need.

98. www.AlhudaUniversity.org 23-Student loans Cont.  In the world of Western Universities, academic scholarships are granted for the outstanding (students) and unable (to afford), alongside work-study opportunities that allow for combining between studying and earning, by which one can avoid falling into these loans. Also, there may be subsidized loans that the nation pays its interest if the student is able to repay all he owes within six months of his graduation.

99. www.AlhudaUniversity.org 23-Student loans Cont.  In addition, there are grants provided by some companions and institutions in exchange for employment contracts with it after graduation.  It is incumbent that one spends his efforts in (trying) all this

100. www.AlhudaUniversity.org 23-Student loans Cont.  If all of these are inexistent, and the interest- based loans are the only way to facilitate the beginning or continuation of a university education, or the only way to secure the Muslim communities need for what cannot be done without of professions and expertise, then this is considered an urgent necessity that removes the sin even though the ruling of impermissibility remains.

101. www.AlhudaUniversity.org 23-Student loans Cont.  This is upon the condition that the one forced to this isn’t an aggressor nor transgressor, and this is by giving the urgent need its proper estimate, and by continuing to search for a permissible alternative and breaking free of these interest-based loans when one is first able to do so in order to minimize the interest amount paid as much as possible.

102. www.AlhudaUniversity.org 23-Student loans Cont.  We emphasize the need to return to the people of Fatwa (i.e. qualified to pass a juristic opinion on Islamic Law) to estimate these needs and urgencies.  It isn’t correct that for just anyone to assume the responsibility to do this, or to measure his need on the need of others.

103. www.AlhudaUniversity.org Conclusion  Almost, all the contemporary usurious transactions are among the ( usurious loan contract) ربا الجاهلية أو ربا الديون.  Usury could be avoided, even in a capitalist economic system.  Our responsibility in providing the Islamic alternative.