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Text Preview Fatwa On Multi-Level Marketing SchemesBy : The Permanent Committee in Saudi Arabia for Research and Fatwâ||  |
The type of business based upon a pyramid scheme - or "multi-level marketing" as it is often called - is unlawful. The real objective of such a business is to obtain the commissions earned from introducing new members to the company and not to earn profits from the sale of the products themselves. At a time when the commissions may reach into the tens of thousands of dollars, the revenue collected from the sale of the products might only be a few hundred. Any person of sense who is given a choice in such a scheme will obviously go for the commission.

This is the reason why companies of this kind, when promoting themselves, depend so heavily on showing the large volume of substantial commissions that they are giving out. They attract customers by the promise of large returns against the payment of a relatively modest initial sum that is often represented as the "price of the product". The product this company is marketing, however, is merely a pretext to obtain commissions and to profit from those commissions.

With this being the true nature of the business, the Islamic ruling on it is that it is unlawful. The reasons for it being unlawful are as follows.

1. It entails the two kinds of unlawful interest:

a. Ribâ al-fadl: the interest resulting from an exchange of like for like in an unequal manner

b. Ribâ al-nasî'ah: the interest that is paid in lieu of credit.

The subscriber is paying a smaller sum at present in order to obtain a much larger sum of money at a later time in exchange for it. This is essentially an exchange of one sum of money for another sum of money of a greater value with a time delay. This is unlawful interest, as stated clearly by the sacred texts and agreed upon by consensus.

The product that is sold by the company is only a pretext for the real exchange that is going on. It is not intended in and of... Show More

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