QUESTION:
Is the multi-level marketing form of business permissible, and is it like a pyramid scheme?
ANSWER:
Multi-level marketing is very similar to a pyramid scheme. The only difference is that one is encouraged to recruit new members in a pyramid scheme, whilst one is not strictly required to recruit new members in multi-level marketing. However, if members are recruited, then the recruiting agent will receive a commission. In essence, the concept is the same in both instances, hence both are not permitted.
If one recruits an agent and earns a stipulated commission from the company for recruiting the agent, then such an arrangement is in order. This is a once-off commission. However, in a pyramid scheme and multi-level marketing scheme, one receives commission for the agents recruited him, those recruited by his agents, and those recruited by their agents and so forth which is not permitted. In conclusion, if one recruits an agent himself then he will be entitled to a commission with the proviso that it is fixed and stipulated. However, he is not entitled to commission for the agents recruited by his agents and their agents.
Yes, if one earns commission through sales only (and not by recruiting new members) in the case of multi-level marketing, then the commission earned will be permissible to use.
ALLAH TA’ALA ALONE IN HIS INFINITE KNOWLEDGE KNOWS BEST!
ANSWERED BY:
Mufti Mohammed Desai
Date:- 26 Safar 1445 / 12 September 2023
