Islam mandates deception [taqiyya] when Muslims deal with non-Muslims. Muslims are allowed to lie to unbelievers if the lie is for the protection of Islam or the furthering of Islamic goals and objectives. In the cause of Islamic expansionism Muslims falsely inform non-Muslims that: Islam is a "religion of peace", the Quran mandates pluralism of religions, "jihad" is only about an "inner spiritual struggle", unprovoked violence against non-Muslims is un-Islamic, immigrant Muslims wish to fully integrate into Western countries by adopting democratic principles instead of Sharia Law, Muhammad was a man of peace, etc. None of these things are true. Taqiyya is not about truth.
There are two forms of lying to non-believers that are permitted under certain circumstances, taqiyya and kitman.
Taqiyya - Saying something that isn't true.
Kitman - Lying by omission. An example would be when Muslim apologists quote only a fragment of verse 5:32 (that if anyone kills "it shall be as if he had killed all mankind") while neglecting to mention that the rest of the verse (and the next) mandate murder in undefined cases of "corruption" and "mischief."
Though not called Taqiyya by name, Muhammad clearly used deception when he signed a 10-year treaty with the Meccans that allowed him access to their city while he secretly prepared his own forces for a takeover. The unsuspecting residents were conquered in easy fashion after he broke the treaty two years later, and some of the people in the city who had trusted him at his word were executed.
Another example of lying is when Muhammad used deception to trick his personal enemies into letting down their guard and exposing themselves to slaughter by pretending to seek peace. This happened in the case of Ka'b bin al-Ashraf (as previously noted) and again later against Usayr ibn Zarim, a surviving leader of the Banu Nadir tribe, which had been evicted from their home in Medina by the Muslims.
At the time, Usayr ibn Zarim was attempting to gather an armed force against the Muslims from among a tribe allied with the Quraish (against which Muhammad had already declared war). Muhammad's "emissaries" went to ibn Zarim and persuaded him to leave his safe haven on the pretext of meeting with the prophet of Islam in Medina to discuss peace. Once vulnerable, the leader and his thirty companions were massacred by the Muslims with ease, belying the probability that they were mostly unarmed, having been given a guarantee of safe passage (Ibn Ishaq 981).
Such was the reputation of Muslims for lying and then killing that even those who "accepted Islam" did not feel entirely safe. The fate of the Jadhima is tragic evidence for this. When Muslim "missionaries" approached their tribe one of the members insisted that they would be slaughtered even though they had already "converted" to Islam to avoid just such a demise. However, the others were convinced that they could trust the Muslim leader's promise that they would not be harmed if they simply offered no resistance. (After convincing the skeptic to lay down his arms, the unarmed men of the tribe were quickly tied up and beheaded - Ibn Ishaq 834 & 837).
Today's Muslims often try to justify Muhammad's murder of poets and others who criticized him at Medina by saying that they broke a treaty by their actions. Yet, these same apologists place little value on treaties broken by Muslims. From Muhammad to Saddam Hussein, promises made to non-Muslim are distinctly non-binding in the Muslim mindset.
Leaders in the Arab world routinely say one thing to English-speaking audiences and then something entirely different to their own people in Arabic. Yassir Arafat was famous for telling Western newspapers about his desire for peace with Israel, then turning right around and whipping Palestinians into a hateful and violent frenzy against Jews.
The 9/11 hijackers practiced deception by going into bars and drinking alcohol, thus throwing off potential suspicion that they were fundamentalists plotting jihad. This effort worked so well, in fact, that even weeks after 9/11, John Walsh, the host of a popular American television show, said that their bar trips were evidence of 'hypocrisy.'
The near absence of Qur'anic verse and reliable Hadith that encourage truthfulness is somewhat surprising, given that many Muslims are convinced that their religion teaches honesty. In fact, it is because of this ingrained belief that many Muslims are quite honest. When lying is addressed in the Qur'an, it is nearly always in reference to the "lies against Allah" - referring to the Jews and Christians who rejected Muhammad's claim to being a prophet.
Finally, the circumstances by which Muhammad allowed a believer to lie to a non-spouse are limited to those that either advance the cause of Islam or enable a Muslim to avoid harm to his well-being (and presumably that of other Muslims as well). Although this should be kept very much in mind when dealing with matters of global security, such as Iran's nuclear intentions, it is not grounds for assuming that the Muslim one might personally encounter on the street or in the workplace is any less honest than anyone else.