Q: In some businesses it is common practice to special order an item for a customer, when it is not in stock, by taking a non-refundable deposit, e.g., 25% or 50%. At times the following situations arise after the item is purchased from the supplier and it arrives:
1. The customer pays the balance and the sale is concluded.
2. The customer changes their mind and then wants a refund, which is refused because the item was specially ordered.
Is it permissible to conduct business in this manner?
A: This is not permissible. When the sale was not concluded, then taking this amount will be regarded as riba (interest).
One solution to overcome the problem is that the customer be told that they are ordering the item for him and taking a deposit from him as part of the payment which they will make to the supplier on his behalf and they will also charge him a fee for this service. Hence, he does not have the right to cancel the sale.
He should also be informed that in the event he does not take the item, then his deposit will not be returned to him, and the item will be sold to retrieve the outstanding debt he is owing.
When the item is sold, then if the amount which it is sold for is more than the outstanding debt, then the extra amount will have to be returned to him (the customer).
Note: In the case where you act as a middle man between the customer and supplier and order the item for the customer (and charge him a fee for this), then if the supplier is happy to take the item back and give a full refund, then you should assist the customer and give him a full refund.
And Allah Ta'ala (الله تعالى) knows best.
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