Are Pyramid Schemes / Network Marketing Businesses Permissible?

Answered by Shaykh Farid Dingle

Question

Are pyramid schemes, also known as network marketing businesses permissible?

Answer

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.

A 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:
Multi level Marketing
ADVISORY ON MULTI-LEVEL MARKETING

I pray this helps.
[Shaykh] Farid Dingle
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