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An Example of Online Auction and its Related Restrictions

Answered according to Shafi'i Fiqh by Darul Iftaa Jordan
I would like to work for an online public auction site where visitors can surf the auctioned items free of charge; however, if they wanted to bid, then each of them has to pay a non-refundable fee, which ranges from half a dollar to two dollars, charged against running the auction and making profit. This transaction could end with making profit or incurring loss, but we are obligated to sell items according to closing bid. What is the ruling of Sharia in this regard?

Answer:
All perfect praise be to Allah, The Lord of The Worlds, and may His blessings and peace be upon our Prophet Mohammad and upon all his family and companions. Muslim scholars have permitted auction sale under the condition that it doesn`t violate the rules of Sharia. In other words, it doesn`t involve Najsh (To offer a man more than the worth of his goods when you do not mean to buy them and someone else follows you in bidding), Gharar(A sale that involves risk and uncertainty) and cheating. However, there is no harm in charging a fee against bidding provided that it equals the actual cost of the administrative expenses. Resolution No.(73) by the International Islamic Fiqh Academy stated: " It is permissible to collect fees against the administrative expenses of running the auction." However, if the charged fees are more than the actual administrative expenses, then this transaction turns into a means of eating up people`s property unjustly, for Allah, The Exalted, said(what means):" O ye who believe! Eat not up your property among yourselves in vanities."{An-Nisa`/29]}. Having examined the aforementioned online auction, it was made clear that most profit is made from the fees charged against taking part in the bidding process because the price at which the auctioned items were sold is much lower than their actual cost. Therefore, this leads to engaging in pure gambling, which is unlawful in Sharia, since the closing bid goes only to one bidder. In conclusion, taking part in the above auction is forbidden. And Allah knows best.

This answer was collected from the official government Iftaa Department of Jordan.

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