Sharia-Compliant Finance: How Newcomers Can Safeguard Wealth and Avoid Exploitation

Some newcomer populations who identify with Islam adhere to Sharia-compliant finance principles. These principles prohibit interest (riba), late fees, undue speculation, and investments made in certain industries, including tobacco, pork, and alcohol. Sharia-compliant finance emphasizes transparency, ethical investments, and fee-based loans as an alternative to products that carry interest.  

Unfortunately, bad actors frequently exploit specific Sharia-compliant finance principles through affinity scams. These scams involve targeting members of a particular group by leveraging shared identity markers to create a deceptive sense of trust. For instance, scammers have recently advertised predatory, Sharia-compliant home purchasing services. In one case, a Minnesota-based fee-for-contract seller offered Sharia-compliant borrowers contracts that avoided riba (interest) but required them to buy homes at above-market rates with unfavorable terms. Other fraudulent lenders promote advance-fee, Sharia-compliant loans for homes, automobiles, or paycheck advances but fail to provide the loan capital after collecting the fees. 

The following resource list is designed to help service providers educate themselves about Sharia-compliant finance, recognize affinity fraud and other common scams, and access general resources to enhance client financial capability. Additionally, this post contains links to the websites of vetted financial institutions and lenders who offer Sharia-compliant loan products and investment opportunities.