Ponzi schemes in the Hajj and Umrah business: causes, methods, consequences and prevention

Nanang Setiawan

Journal of Financial Regulation and Compliance, 2025, vol. 33, issue 5, 743-759

Abstract: PurposeThis study aims to analyze Ponzi schemes’ root causes, methods, consequences and prevention measures in the Hajj and Umrah businesses.Design/methodology/approachThe study uses a qualitative research approach, using case studies. Data were collected through interviews, field observations, literature reviews and analyses of relevant news reports. The informants include employees from the Hajj and Umrah section of the Ministry of Religion in District X, East Java, Indonesia, management of Hajj and Umrah travel companies and two victims of Ponzi scheme fraud.FindingsThe findings reveal that the high demand for Hajj and Umrah services, coupled with limited quotas, aggressive marketing strategies by Umrah travel agencies and low financial literacy among the public, are the primary drivers of Ponzi schemes in this sector in Indonesia. Although Indonesia has regulations governing the organization of Hajj and Umrah through Law No. 8 of 2019, supervision and enforcement remain weak. The consequences include financial losses, reputational damage and social and psychological impacts.Originality/valueThis study contributes theoretically by confirming the relevance of the fraud triangle theory in explaining the causes of fraud in the Hajj and Umrah sectors. Practically, it offers actionable recommendations to strengthen governance and protect pilgrims from fraud.

Keywords: Ponzi schemes; Hajj; Umrah; Hajj and Umrah travel; Consumer fraud; Pilgrims (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:jfrc-01-2025-0023

DOI: 10.1108/JFRC-01-2025-0023

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