Series of Answers by the Eminent Scholar Ata bin Khalil Abu al-Rashtah, Ameer of Hizb ut Tahrir, to Questions from Followers on his Facebook Page "Fiqhi"
Answer to Question Network Marketing
To Abdulhamid Fawaghra and Ammar Abu Owais
Questions:
Question from Abdulhamid Fawaghra: Assalamu Alaikum, I would like to ask about the subject of network marketing. A friend sent me an invitation for a new job opportunity that would bring me additional income. The opportunity was to work via the internet, and I attended introductory meetings on the Zoom application. The summary of their content was an introduction to the work and a statement of our need for additional income given the circumstances we live in, especially in light of the Corona pandemic and the fact that all transactions have become remote and electronic.
The work is with the Jeunesse company for cosmetic and medical preparations. In order for each person to have an electronic store or an electronic wallet, they must purchase a bundle of preparations ranging in price between one thousand and two thousand dollars at the lowest estimate, paid through the bank, after which the bundle arrives at your home. The method of work is not selling or promoting the bundle that has become mine, or selling it via the internet—which they consider the traditional way—but rather the work is by inviting other people to join and participate in the work, forming a team, persuading them of the opportunity, and interacting with the largest number of family, relatives, and colleagues via social media sites and involving them in meetings on the Zoom application where they meet veterans in this field who have obtained ranks and achieved many profits...
The profit is through the commissions you earn on each new subscriber who takes the first step, which is purchasing the bundle, which mostly remains for personal use. The more you involve others and the longer the chain, the more the commissions increase... Likewise, those you invite will invite other people and they will receive commissions, and you will also receive an additional commission for every new person. Thus, the commission is estimated at $35... Also, as the team number increases, you receive privileges, commissions, and new ranks with the increase in financial return, which reaches $4000 within two months, according to the description of the person who invited me.
I have a suspicion about the matter and doubt about its lawfulness, as my first questions were: what is the position of Shari’ah on this work and what is the opinion of scholars and Sheikhs regarding it? I hope for enlightenment and benefit, and I apologize for the length.
Question from Ammar Abu Owais: Assalamu Alaikum wa Rahmatullahi wa Barakatuh. I hope you can benefit me on this subject as soon as possible, and may Allah reward you with good. Ammar Abu Owais.
Assalamu Alaikum... E-commerce has spread recently, especially network marketing, and opinions have split regarding its permissibility and prohibition. My question is: what is the ruling on network marketing? I will clarify the company's work so the picture becomes clearer... Initially, the company proposes to those who want to join the work to pay a certain amount of money to obtain a position in the network in the name of ID, as if it were an authorization for him as an agent, and this ID costs the company, so it takes money from its client... After joining, the work begins as follows, divided into two parts:
First, the client begins marketing and selling the product, which has a known and real price without gharar (uncertainty), and achieves the goal and intent in exchange for a relative commission given by the company to the client as a result of selling this product. Note that the client transfers the buyer's information to the company, and the company transfers the product to him and gives its client his percentage without the client owning the product, on the basis that he is a marketer and not a seller. This is on one hand...
The second and more important hand: the client promotes the company and brings in other clients who branch out under him, right and left, such that he takes 500 points for every client he brings. If he is able to achieve balance on the right and left through selling products and bringing people—for example, 1000 points on the right and 1000 points on the left—the client rises a rank in the company to receive a fixed commission as a steady income. The more the number of points increases on the right and left, the first client rises in his ranks and commission... and others do the same work to rise as well... Does this work contain gharar (uncertainty) or gambling, or does it fall under Ju’alah? I hope for a clarification of the Shari’ah ruling in that, and may Allah reward you with good.
Answer:
Walaikum Assalam wa Rahmatullahi wa Barakatuh,
Your two questions are similar, and we have previously received similar questions about network marketing. We answered them previously on 13/10/2007, 08/03/2009, and 19/08/2015. I will extract for you from those answers what is sufficient:
Contracts in Islam are clear and simple, with no complexity. Their common principle is that the transaction must be known in terms of its reality and the parties to the contract, followed by knowing the texts related to it, studying them, and deducing the ruling through correct Ijtihad.
The companies mentioned in your questions deal with a network of marketing for several products. These companies stipulate that whoever markets their products must purchase something from these products, as in the first question, or pay a certain amount "as if taking an authorization of agency," as in the second question. This is done so the company gives him the right to bring customers to it and gives him a commission for them (meaning he becomes a broker/samar for the company, bringing buyers and taking a commission for them). The company does not give him a commission until he brings a number of buyers, i.e., according to the company's program prepared for this purpose. In other words, the first buyer or the one who paid the first amount takes a commission for those he brought himself, and likewise a smaller commission for those brought by others, and the marketing (samsarah) work continues in this manner, i.e., in the form of a brokerage sequence or a marketing network.
This type of commercial work is contrary to Shari’ah, and the explanation of that is:
a) It is not valid for the seller to stipulate that a man will not be his broker unless he buys from him. Rather, it is only permissible if the reality of brokerage (samsarah) applies to it, which is that the seller says to a man: "If you bring me customers, I will give you a wage for every customer," and as I said, without stipulating that he must buy from him or pay him money to become a broker for him. Since the company stipulates the necessity of the "marketer" buying from its products as in the first question, or paying it a certain amount as in the second question, so that he has the right to work for it as a broker for a commission—meaning he brings customers and takes a commission on them—this means that the purchase contract (or paying money) and the brokerage contract are two contracts in one contract, or two deals in one deal, because they are conditional upon each other. This is haram, as:
نَهَى رَسُولُ اللهِ ﷺ عَنْ صَفْقَتَيْنِ فِي صَفْقَةٍ وَاحِدَةٍ
"The Messenger of Allah ﷺ forbade two deals in one deal." (Narrated by Ahmad from Abdul Rahman bin Abdullah bin Mas'ud from his father).
This is as if I say to you: "If you sell to me, I will rent from you, or broker for you, or buy from you... etc." It is clear that this reality exists according to the question; the sale and brokerage are in one contract, meaning the necessity of buying from the company is a condition for the brokerage work, i.e., for marketing for a commission for the buyers brought to the company.
b) Brokerage (samsarah) is a contract between the seller and the one who brings customers to him. The brokerage commission in this contract is due for those the person himself brings to the company, and not for those whom others bring. Since the brokerage commission in the aforementioned company transaction is taken by the broker (the marketer) for the customers he brings to buy from the company, as well as for those whom others bring, this is contrary to the brokerage contract.
c) The purchase price from the company is accompanied by gross disparity (ghubn fahish). Although the buyer is aware of that, the matter is not devoid of deception as a result of the "devious" methods the company uses to promote its business, leading the buyer to pay an exorbitant price for the company's product which is not worth a small fraction of the actual price... All of this is because of what the company promotes regarding a "prosperous" future for this buyer because he will be given the opportunity to market the company's product in exchange for a commission for (buyers) he brings to the company, as well as for the buyers who will be brought by those he brought first! When the buyer is unable to bring buyers, especially those at the end of the chain of buyers, the deception has surrounded him, and he loses the exorbitant price he paid for a product that is not worth a tenth of what he paid! Deception in Islam is forbidden. The Messenger of Allah ﷺ said:
الخَدِيعَةُ فِي النَّارِ...
"Deception leads to the Fire..." (Narrated by al-Bukhari from Ibn Abi Aufa).
The Messenger of Allah ﷺ said to a man who was being deceived in sales:
إِذَا بَايَعْتَ فَقُلْ لاَ خِلاَبَةَ
"When you enter into a transaction, say: there is no deception (la khilabah)." (Narrated by al-Bukhari from Abdullah bin Umar, and al-khilabah is deception).
This is the wording of the Hadith, and its understanding indicates that deception is haram.
In conclusion, this transaction in the manner explained in the questions is contrary to the conditions of brokerage and is not devoid of deception. Thus, it is a transaction contrary to Shari’ah. I ask Allah (swt) to grant us success by His grace and bounty to establish the Khilafah and implement the economic system in Islam, which clarifies the pure and clean economic transactions that provide a comfortable living and a tranquil life for all individuals of the citizenry. Allah is Mighty and Wise.
This is what I prefer in this matter, and Allah is most knowing and most wise.
Your brother, Ata bin Khalil Abu al-Rashtah
23 Jumada al-Akhirah 1442 AH Corresponding to 05/02/2021 CE