Question: Are pyramid schemes, also known as network marketing businesses permissible?
Answer:
Wa alaykum assalam wa rahmatullahi wa barakatuh,
Dear questioner,
Thank you for your important question.
Pyramid schemes are usually not permissible because they involve a membership fee for eligibility for the commission, commission for other people’s work, and commission that does not reflect the service provided.
Commission only contract (mudaraba) is fine, as are bonuses. But in the pyramid scheme, the goal is creating the matrices and not achieving sales off which commission is earned.
Please also see:
https://darulifta-deoband.com/home/en/Shares–Investments/385
https://www.muis.gov.sg/officeofthemufti/Irsyad/Advisory-on-Multi-Level-Marketing
I pray this helps.
[Ustadh] Farid
Checked and Approved by Shaykh Faraz Rabbani
Ustadh Farid Dingle has completed extensive years of study in the sciences of the Arabic language and the various Islamic Sciences. During his studies, he also earned a CIFE Certificate in Islamic Finance. Over the years he has developed a masterful ability to craft lessons that help non-Arabic speakers gain a deep understanding of the language. He currently teaches courses in the Arabic Language