What is the Islamic ruling on multi-level marketing?
Sheikh `Abd Allah al-Sa`idî, professor at King Sa`ûd University
This business scheme resembles a chain of brokers; whereby each broker employs others and gets a certain commission, and so forth.
In general, being a broker is permissible, with or without compensation, but it may be forbidden if it leads to any violation of the general purposes of Islamic Law.
One such case is the ruling in Islamic Law that prohibits a person from a city going out and doing business with incoming merchants before they reach the city. Some scholars pointed out that the reason for the prohibition is that the city dweller is acting as a broker in order to raise the prices of the commodities for the cities inhabitants, whereas one of Islam’s aims to ease people’s life and lower their costs of living.
Therefore, it is not preferable to have an excessive number of brokers and middlemen, because their combined profits would translate into an increase in final price to the consumer.
If prices are not aversely affected by this increase in brokers, then such a selling scheme is lawful.
And Allah knows best.
Source: Islam Today
-- Al Arabiya Digital