Fatwa ID: 87756
Title: Selling products for higher prices (price gouging) during COVID-19 crisis
Category: Financial Transactions
Scholar: AMJA Resident Fatwa Committee
Date: 05/04/2020

Question

Can we sell products for higher prices (price gouging) during COVID-19 pandemic?


Answer

Basically — and especially during this crisis and under these circumstances — people should assist their brothers and sisters in faith by lending them a helping hand and not exploiting their wants and needs by raising prices and monopolizing products. Doing the latter would harm them, which opposes the Legislator’s intent of building a cooperative and merciful community. In Sunan Ibn Majah, the Prophet (peace be upon him) is reported to have said, “Neither harm nor reciprocate harm.”

Raising prices during a catastrophe is the result of either one of two things:

First, it is due to a diminished supply of products (scarcity), which has caused the cost of goods bought by the merchant to go up, and thus the merchant has to increase the retail price in order to maintain their standard profit margin. In many countries there are supervisory statutes in place to regulate this issue, and these regulations should therefore be referenced when setting fair prices.

Or second, raising the price is the result of seeking higher profit margins, exploiting limited supplies and scarcities of those products for which an exorbitant price is set due to people’s need for them. There is no doubt that this practice (in English legal terminology: “price gouging”) is prohibited, because it is included in his (peace be upon him) statement, “Neither harm nor reciprocate harm.” The ruling on this varies between disliked (makrooh) and prohibited (haram), based on the people’s need and the level of harm caused by the increased price. In Hāshiyat Ibn ‘Abideen, it is mentioned that “compelled buying and selling is invalid; this is when someone needs food, drink, or clothing, etc., and the seller will not sell it without raising the price excessively.” Shaykh al-Islām Ibn Taymiyyah said, “The compelled person is he who cannot find what he needs except with this individual, and so the one who has the needed item or product must seek a profit (from selling to the person who is in need of that item) in the same manner they would from someone who is not compelled; this is because it has been reported in the collections of hadith that the Prophet (peace be upon him) prohibited any forced sale.”

The impermissibility of monopolizing and excessively raising prices is magnified when it is associated with people’s basic wants and needs, such as medicine, food, disinfectants, medical supplies, and so on, during times of hardship.

We thus advise all merchants to be kind to people during this crisis and exemplify the statement of the Prophet (peace be upon him), “May God have mercy on the person who is generous when they buy, sell, and take.”

All success lies with Allah.