What is the ruling on dealing with HYIP (High-Yield Investment Program) companies that offer investment programs with high and predetermined profitability, and is this type of investment permissible in Islamic law, especially given that some companies are trustworthy in investing funds while others are fraudulent, and how can one distinguish between them?

The question involves a contradiction between guaranteeing the principal along with a percentage of it, and not guaranteeing profit or principal.

If companies guarantee the return of the principal with an additional percentage, this is a forbidden usurious transaction, similar to usurious bank loans. The essence lies in the realities, not the words, because guaranteeing the principal with an increase is the reality of a usurious loan, not a legitimate investment. However, if what the capital owner is entitled to is a pre-determined percentage of the principal in case of profit, this is also a forbidden transaction.

The difference between this transaction and renting a taxi for a fixed amount is that renting a taxi is a permissible lease, while the former is forbidden usury, because money cannot be leased.

However, if companies invest money in permissible areas and do not guarantee the principal (it is exposed to profit and loss), and what the capital owner is entitled to is a pre-agreed percentage of the profit (not of the principal), then this is a legitimate and permissible investment.