 |
|
|
|
|
Last Update: 04:58 GMT, Sunday, Dec. 06, 2009 |
|
Living Shari`ah > Fatwa Bank
|
|
|
 |
|
|
|
|
|
 |
Name of Questioner
|
Muslim
- Egypt |
|
Title
|
Chain Pyramidal Commission: Is It Permissible?
|
|
Question
|
This refers to a fatwa given by Mufti Dr. Monzer Kahf on 23rd April 2002 under the title “Giving Commission to Business Solicitors”, for a question in connection with network marketing. Both the question and the fatwa appear to be vague and ambiguous. I would like to have a clear answer. At the outset, the person who asked the question did not disclose the value of the product and its real market value. What I understand is that the product, Gold Quest International’s Numismatic Gold Coins, is higher priced than its actual market value. Since the company offers charismatic returns, the solicitors normally do not care about the value of the product in anticipation of the potential benefit in the future. Since the actual product on sale is not the product but the charisma of the anticipatory returns for each individual who joins the chain, I feel that there is a violation of fundamental norms of Shari`ah for business.
Secondly, it is quite clear that one who buys the product would not at all be doing it for its use but for engaging in the business with anticipation that he would get someone to join him, thus registering his returns. It is common knowledge that many people who join in this chain would lose their money due to the simple fact that all the solicitors would not be able to book 10 people to ensure their returns. If the product with them is worth the money they spent, there would be no loss for them. The commission received by the upper link-man would definitely involve the part of the loss that is sustained by the lower links. Is it permissible in Shari`ah?
Thirdly, it is a business that exploits friendship. A person who is not familiar in the business would not have the confidence and credibility to approach a stranger to join him; instead, he would depend on his friendship to implant the seed of his business. Since the product is not an essential consumer item, the exploitation of friendship would be considered unacceptable to Shari`ah. I would appreciate receiving a further clarification on this subject.
Notes
1. I think the network marketing people misuse your fatwa.
2. I believe Allah will question us if we buy unnecessary products.
3. And Allah will also question us for convincing others to buy this unnecessary product.
4. According to the Islamic Shari`ah, a businessman should have risk of profit as well as loss.
|
|
Date |
12/Jan/2003 |
| Name of Counsellor |
Monzer Kahf |
| Topic | Brokerage, Earning livelihood |
|
|
|
|
|
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Dear brother, thanks a lot for your question and the interest you show in having a clearer view of the true teachings of Islam. May Allah help you get the right understanding and stand firm on the Straight Path! Amen!
Before answering your question, we’d like to draw your attention to the fact that we have to differentiate between the Shari`ah-based rulings on chain pyramidal commission and selling gold.
If the object of sale is not gold, silver or currencies, doing business in this chain pyramid style is permissible provided full disclosure is given to customers. In most cases, there is not complete disclosure.
However, gold, silver and currencies are something different. Their exchange is called in Shari`ah a sarf contract. In a sarf contract there must be IMMEDIATE DELIVERY AND PAYMENT AT THE VERY TIME OF SALE CONTRACT.
In his response to your question, Dr. Monzer Kahf, a prominent economist and counselor, states:
"Dear brother, the Fatwa of April 23, 2002 on “ Giving Commission to Business Solicitors ” is still valid and these new points you are raising do not change anything in the substance of the transaction and, consequently, the fatwa.
However, I do really appreciate the added explanation. It clarifies some points especially that commission is not pyramidal. The issue of commission has only one bearing on the Fatwa, and that relates to transparency. Once relations and commissions are completely transparent to new customers so that they don’t think of themselves as lured by honest unbenefitting friends, there must be no problem. Also, sale at a price that is a little higher than the market price is not a big deal as long as the difference is not substantial (one third or more, as one third makes it in the level of ghabn according to some schools of fiqh). Also, the social activities of the company are a different matter that does not affect the Shari`ah ruling unless they support aggressors against human rights of Muslims and others, such as giving financial support to the aggressors and occupiers in Palestine.
The important issue in this company is the sale of gold. Gold, silver and currency can only be sold cash (including handing over of money, credit cards, check, bank transfers) and payment and delivery of gold must be done at the same time and at the time of the contract. This is a necessary condition for sale of currencies and gold and silver. It came in an authentic Hadith of the Prophet (peace and blessings be upon him).”
If you are still in need of more information, don't hesitate to contact us. Do keep in touch. May Allah guide us all to the straight path!
|
|
|
|
|
|
Allah Almighty knows best. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please feel free to contact the
Living Shari`ah editor at:
Living.Shariah@iolteam.com
|
|
|
|
IslamOnline.net is not responsible for the content of external linked Web sites.
|
|
|
|
|
