Is Giving Commission in a Pyramid Scheme Business Permissible?

09 June, 2020
Q A company located in British Virgin Island named as Gold Quest International has its head office in Hong Kong. This company manufactures numismatic gold coins, gold jewelry, etc. The company has come up with a business plan for individuals. According to the business plan, an individual has to buy a single product from this Co. After purchasing the product, the company gives the person a specific identification number called TCO (Tracking Center Ownership). The TCO has to introduce/refer the same business to minimum 10 people. According to the business plan, after bringing 10 people to the business, the company pays U.S. Dollars 400/- as remuneration. Furthermore, when these 10 referred people refers the business to others the up line individual keeps on getting the credit to his geology report also and the individual becomes eligible to get remuneration from the company, as long as the new business is introduced by himself or any of the other individuals. In light of Islamic principles, I would appreciate receiving a fatwa to clear my doubt that the income generated through such means is halal or haram. My question is, it permissible in Islam to give commission to business solicitors?

Answer

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.


In this fatwa:

There is nothing in the Shariah that prevents giving commission to solicitors of business, as long as it is known to the person on the other side of the transaction. 


In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

The practice of chain pyramidal commission is permissible provided there is full disclosure, i.e., all TCO’s down the line know the structure of commission and know that the prices they are charged include all these commission up to the top of the pyramid.

There is nothing in the Shari`ah that prevents giving commission to solicitors of business, as long as it is known to the person on the other side of the transaction.

If there is no full disclosure, it may become similar to bribes or at least cheating.

Remember that sale of gold and golden jewelry must always be in cash (hand to hand) as the Prophet (peace be upon him) instructed.

📚 Read Also: Is Getting Paid Commission on Referrals Permitted In Islam?

Almighty Allah knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.

About Prof. Dr. Monzer Kahf
Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey