|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.