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Is whether Network Marketing Halal?

Answered as per Hanafi Fiqh by Jamia Binoria

Assalamu Alaikum!
What my question is whether Network Marketing Halal? A Norway company, GOLD MINE INTERNATIONAL, has adopted this method to increase customers. Please note that the function of this company is only manufacturing and selling of gold products. Details of their system is explained in their website “www.goldmineint.net” (in DEMO in the tab SUPPORT US). I have a copy of the Fatwa issued by Mufthi Asmathullah (Naib Mufthi-Darul Iftha) where-in he has said network marketing as Halal, in answer issued to the question raised regarding the network marketing of “My7Diamonds” company. In this Fatwa the answer is very brief and no reference of Quranic Ayaath or Ahadees are quoted whereas I have got a Fatwa trhough a website “www.islam-qa.com” as per “Standing Committee for Academic Research and Issuing Fatwas. Fatwa no. 22935, dated 14/3/1425 AH.” according to which it is Haram. I have informed everybody and it is notices that in this work nobody is deceived but making effort is conditional to earn profit. My earnest request is that please visit and study both the websites in detail and submit a comprehensive answer quoting references from Qur’an and Hadees as to whether network marketing is Halal or Haram (as is being done in Gold Mine International)? And is there a connection of Riba al Fadhl or Riba al Nasiah in network marketing?

الجواب حامدا و مصلیا

Deeply gone through the process of the said “Gold Mine International”. Nowadays a large number of companies have emerged who do business in such a way that they sell things which are cheap at expensive prices and also negotiate to pay commission on enrolling members. People under the influence of greed tend to purchase things which are cheap at higher prices which according to Shari’a is a form of Qimar (Gambling). As such if the products of Gold Mine International are more expensive than the prices of same in the normal bazar then this business activity is impermissible. Market price can be determined by selling the company products in the open market. If the company products are not available in the market the price on which the customers prepare to buy the company product is considered as the market price of the company product. If the customers are prepared to buy at company price then the market price is equal to the company price. If the customers are not prepared to buy at company price then it indicates that the company price is more than the market price. The additional amount is placed on a chance that the customer succeeds in enrolling members, or else, if he doesn’t succeed in enrolling members the additional amount he paid will be a loss.
If the prices of products of the company are equal to the market value or have a very small difference even then the following defects are found in the procedure of the company.
1. Saying that the real purpose of the company is only to sell it’s products is only a trick because if a person wants to buy a company product without becoming a member and without getting involved in the chain company doesn’t sell it’s products to him.
2. According to the company procedure, entitlement for commission is under the condition that members are enrolled from both sides of the chain. Therefore if a person enrolls members from one side and didn’t from the other side, or the required number of members were not enrolled, he would not get returns for his tiresome effort.
According to the Shari’a, it is not permissible to have such conditions because in one way a person’s tiring effort becomes useless and he does not get any reward for it and on the other hand the commission for which he is entitled is pending on existence and non-existence as if the transaction was made thus; if members are enrolled from both the sides, the commission would be such and if enrolled less than that, no commission at all. And this is not correct according to the Shari’a. If the procedure is made in such a way that complete commission is on the required no. of members and less commission is for less members, then there is an allowance in Shari’a for it.
Therefore, it is not permissible to participate in this business activity with the said defects in the present process.
Refrain from it and also prevent others too from it.
It is necessary for those who are engaged in this business with the above mentioned defects to quit it and make repentance and do Isthighfar for the mistakes committed and also to refrain from utilizing the income received from this business activity.

This Q&A was indexed from the official english fatwa portal of Jamia Binoria. It is an Islamic educational institute in Karachi, Pakistan.

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