What is the ruling on the sale of tawarruq (meaning that a man buys goods from a merchant without cash, intending to obtain cash, and then sells them to someone other than the merchant for cash at a lower price)?

The questioner : What is the ruling on the sale of tawarruq?

The Shaykh : Clarify the sale of tawarruq so that it is understood.Those present .

The questioner : Is the sale of tawarruq when a man buys goods from a merchant without cash, intending to obtain cash, and then sells them to someone other than the merchant for cash at a lower price?

The Shaykh : In reality, this name is like naming riba as interest. Tawarruq is an invented name. As for what the Messenger (peace and blessings be upon him) named in the previous hadith, it is 'inah. The scenario, as you heard, is that a man wants money, and because the bonds of affection and love among Muslims are frayed, this Muslim finds no one to lend him a good loan. So he does not want to go to the bank, because that is open riba, such as taking a thousand on the basis of repaying it after a specified period as a thousand and one hundred, or less, or more. Instead, he goes to a merchant and buys a need from him for a thousand, not in cash, but as they say today, on installments or on credit. Then, after buying it for a thousand, he returns and sells it to the seller for eight hundred. The seller records the amount he previously bought for a thousand plus an increase, and he takes eight hundred in exchange for the thousand plus the increase. This is riba. It is correct for me to say that I curse the one who deals in riba. Why? Because the difference is very vast. In the bank, you take a hundred to repay a hundred and five or a hundred and ten, but here the difference is very exorbitant. So this type of deception regarding what Allah the Mighty and Majestic has forbidden, therefore, the sale of 'inah or this tawarruq is more forbidden than open riba. We do not want to permit open riba, for it is cursed, as you heard, and that is sufficient for it to be a sin. But deception to eat riba? Deception to eat riba brings another curse upon its owner. Why? Because first, he eats riba, so he is cursed by the text of the previous hadith. Second, he deceives to eat riba, and this is another curse. Where did this curse come from? From his saying (peace and blessings be upon him): What does this hadith mean? The hadith first points to a punishment that Allah the Mighty and Majestic imposed on the Jews because of their injustice to themselves and their transgression of their Lord's law. Among that, as He the Exalted said: Allah forbade certain things to the Jews because of their injustice and their killing of the prophets without right. These things are originally lawful, such as fats such as fats. So he (peace and blessings be upon him) said in the previous hadith: What does "jammaloha" mean? It means they melted them, placed them in pots, and lit a fire underneath them until they softened and melted, becoming in a form other than the original form. Satan made it attractive to them that changing the form takes the forbidden into the circle of the lawful. And this is playing with the rulings of the Shari'ah and deceiving them. Therefore, he (peace and blessings be upon him) said: So eating riba is forbidden, and deceiving to eat riba is forbidden a second time. The one who eats riba is cursed, and the one who deceives to eat riba is cursed again. Therefore, this tawarruq or the sale of 'inah is not permissible, doubly so. First, because it feeds on riba, and that seller eats riba. Second, because they conspired and agreed to make lawful what Allah has forbidden, so they fell into the same trick that the Jews fell into before.