As-Salamu `alaykum! I would like to ask you about a network marketing whereby a new company sells gold through the internet and the person who buys from them can get involved in the business as an agent for the company (to become an agent you have to buy a gold coin) and after becoming agent, for each sale you make, you receive 40 US dollars as commission, either the sale is conducted directly or indirectly.
Let us say that there is Ali , Khalid and Ahmad . Ali introduced Khalid to the business and he became an agent as he bought coin from the company, Ali would receive his commission from Khalid, later Khalid introduced Ahmad to the business and he became agent, also this time Ali and Khalid would receive commission as Ahmad would be considered as a direct customer to Khalid and Ali also would receive his commission as Ahmad would be viewed as indirect customer to him but the sale normally goes through Khalid who works like an agent to Ali.
One receives his commission after making 10 sales and it's very easy for one to stop working for this company any time one decides to do so. My question is: Is it halal to do business like that? Thanks and Jazakum Allah Khair!
Wa `Alaykum As-Salaam Waramatullah Wabarakatuh.
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 questioner, we really appreciate your forwarding this question to us, and we implore Allah to let our humble efforts come up to your expectations.
Responding to the question, Dr. Monzer Khaf, Scholar in Islamic Economics & Financial Expert, states the following:
"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 no complete disclosure. The amount of commission you get from sales to the level following, you (your customers) and the amount you get from what you called indirect sale (the customers of your customers) MUST BE KNOWN TO THEM. This kind of sale is clearly based on the Amana Sale. It requires full disclosure in accordance with the Shari'ah.
However, gold, silver and currencies are something different. Their exchange is called in the Shari'ah a Sarf contract. In Sarf contract there must be IMMEDIATE DELIVERY AND PAYMENT AT THE VERY TIME OF SALE CONTRACT.
Therefore, sale of gold, silver and currency cannot be done by proxy. Internet sale of these items requires shipment on the same day of charging the credit card or the purchaser account. If shipment is done on the same day it is permissible."
Shedding more light on the issue with special reference to clarifying the Islamic ruling regarding the legitimacy of the transaction carried out by a company called "Gold Quest", Dr. `Ali Muhyy Ad-Din Al-Qurra Dhaghi, professor of the Principles of Islamic Jurisprudence at the Faculty of Shari`ah Qatar, states:
"In fact, Gold Quest Company is mainly involved in trading in gold via the internet. This trade is carried out in a certain way that goes against the teachings and the stipulations of the Shari`ah. Here are the reasons behind this saying:
1. The transaction involves delaying the delivery of the gold for a certain period after making the deal in which a buyer pays a certain amount of money for a quantity of gold that he receives after a span of time. This really contradicts the stipulation of the Sunnah. In his Hadith, the Prophet (peace and blessings be upon him) says: “Sell not gold for gold or silver for silver unless when you do so on the spot and unless they are equal in quantity.”
Based on the above Hadith, Muslim jurists stipulate that, in order to be valid, the delivery should be made on the spot without delaying any of the two objects of the transaction.
2. This transaction does not cope with the main objectives of the Shari`ah that aim at securing the social and economic welfare of Muslims. The very aim of these transactions is the benefit of a group of brokers who actively work for the marketing of their goods.
3. The price of a gold mould is very expensive and there is a form of defraud. The gold sold in these transactions has no historical value or certain advantage.
Based on the above mentioned, it has become crystal clear that such a transaction is no more than a form of devouring people’s money without right. Almighty Allah says: “O ye who believe! Squander not your wealth among yourselves in vanity, except it be a trade by mutual consent, and kill not one another. Lo! Allah is ever Merciful unto you."" (An-Nisaa’: 29)
Almighty Allah knows best.