|Ban_pyra.gif (No to network marketing). (Photo credit: Wikipedia)|
Good question! Some research is required to answer this, and one of the best resource is Islamqa.info (however, it is also known for issuing its own fatwas, something frowned upon in Saudi Arabia, but that's something else entirely). In it, we were able to locate Fatwa 42579 as issued by the Standing Committee as established by the Sovereign of Saudi Arabia to be the definitely authority for all Sunni Islamic matters.
To make a long story short... Network Marketing is PROHIBITED under shariah law. It is haram.
Why? Here's my summary, but you can read the full decision.
1) If you have to buy a product / kit to join, and you earn "commission" by recruiting others who also buy the kit, you have engaged in two forms of riba, aka usury / interest, and riba is considered haram. Specifically, riba al-fadl (exchange of goods of same type but different quantity) and riba al-nasi'ah (deferred payment of larger amount than if paid immediately, i.e. get 10 now, or 12 later). The product / kit purchased is considered a smokescreen for the riba.
2) If you are promised pay for recruiting X number of people, it is considered gharar, or "ambiguous transaction", also forbidden, because there is a chance you will be unable to recruit the number of people needed to be paid.
3) The transactions are fundamentally insincere and thus, forbidden, as the transaction benefits primarily the company and some participants encouraged to misrepresent the true nature of transaction.
4) The transaction itself also involves lying and cheating by promising participant wealth they do not usually earn.
In counter-arguments, Network Marketing is NOT considered brokerage, since an initial payment is involved. Brokerage fee (commission) is paid strictly for sale of the product. If you have to buy the product first, it cannot be considered brokerage (and thus you are paid commission). Furthermore, there is no true sales as in a brokerage someone actually wanted the product, whereas in network marketing, recruit primarily wants the promised income, not necessarily the product.
Network Marketing commission payments cannot be considered a "gift". A gift given for a loan is considered riba and if the "gift" obligates you to something it is not a true gift.
Further research brought up a few more interesting bits:
* Shariah law prohibits use of Allah's name for business transactions (Yet how many Christians use God's name to cheat their followers?)
* Shariah law prohibits cheating, which includes false eulogy and concealment of defects (yet nobody ever mentions the failure or low income of network marketing, do they?)
* Exploitation of ignorance is also prohibited (lie to the ignorant about the product's true worth)
So, if you are a Muslim, and considering network marketing... don't. Free free to ask your imam and consult the documents I linked to. A true Muslim will never touch network marketing... and remain a true Muslim.