Lawful and Unlawful in regards FRAUD

Islam prohibits every type of fraud and deception, whether it be in buying and selling or in any other matter between people. In all situations the Muslim must be honest and truthful, holding his faith dearer than any worldly gain. The Prophet said, “Both parties to a transaction have a right to cancel it as as they have not separated. If they tell the truth and make everything clear, they will be blessed in their transaction, but if they lie and conceal anything, the blessing will be blotted out. (Bukhari.) He also said, “It is not permissible to sell an article without making everything (about it) clear, nor is it permissible for anyone who knows (about its defects) to refrain from mentioning them.” (Hakim and al-Bayhaqi.)

Once, when passing by a grain merchant, the Prophet's curiosity was aroused. He thrust his hand into the heap of grain and found it wet. "What is this, O merchant?" he asked. "It is because of rain," the man replied. The Prophet then said to him, "Why did you not put it on top so that the people could see it? He who deceives us is not of us." (Reported by Muslim.) In another report it is said that he passed by a heap of grain which was made to look good by the merchant. The Prophet put his hand into it and found it to be bad. He told the merchant, "Sell the good and the bad separately. He who deceives us is not of us." (Reported by Ahmad.)

The Muslims of earlier times strictly observed the practices of exposing the defects of what they sold, of telling the truth, and of giving good advice. When Ibn Sirin sold a sheep, he told the buyer, "I would like to tell you about a defect it has: it kicks the fodder." And when al-Hassan bin Salih sold a slave girl he told the buyer, "Once she spat up blood." Although she had done this only once al-Hassan's Muslim conscience required that he mention the fact, even if it resulted in his receiving a lower price.

The sin of deceiving is the greater when the seller supports it by swearing falsely The Prophet told the merchants to avoid swearing in general and, in particular, in support of a lie, saying, "Swearing produces a ready sale but blots out the blessing." (Reported by al-Bukhari.) He disapproved of frequent swearing in business transactions because first, it is probably done to deceive people, and second, because it reduces respect for the name of Allah.

One way of defrauding the customer is to measure or weigh incorrectly. The Qur'an emphasized this aspect of business transactions and included it among the ten obligations described in the last part of Surah al- An'am: “ ...And give full measure and (full) weight, in justice; We do not burden any soul beyond what it can bear....” (6:152) And elsewhere in the Qur'an Allah says, “And give full measure when you measure and weigh with the straight balance; that is most fitting and best in the final determination.” (17:35) He also says, “Woe to the defrauders—those who, when they take the measure from people take it in full, but when they measure for them or weigh for them give them short. Do they not realize that they will be raised up again on a mighty Day, a Day when mankind will stand before the Lord of the worlds?” (83:1-6)

Islam has also prohibited the Muslim to buy any article which he knows to have been usurped, stolen, or taken unjustly from its owner; Said the Prophet “He who buys the stolen property, with the knowledge that it was stolen, shares in the sin and shame of stealing.” (Reported by al-Bayhaqi.) The passage of time does not render a piece of stolen or misappropriated property lawful, for in Islam the mere passage of time does not transform the haram into the halal nor does it deprive the original owner of his right to it.