A number of scholars have issued fatwas stating that it is haram to deal with companies that use pyramid schemes, even if they sell some goods or products.


Explanation of pyramid scheme
 !you ask your friend to give you 100 bucks, and bring in two more people to do the same. If he brings 2 more people, he will get 200 back. This is a very very basic example, but in the end, the top guy makes the most money.!




Praise be to Allah.

The Committee replied: This kind of dealing is haram, because the purpose of this dealing is to earn commission, not to buy the product. The commission may reach tens of thousands, whilst the product is not worth more than a few hundred. Any smart person who is offered a choice between the two will choose the commission. Hence these companies rely on marketing and advertising emphasizes the size of the large commission which the participant can earn, and offers the incentive of a large profit in return for a small sum, which is the price of the product. The product marketed by such companies is merely a screen or a means of earning these commissions and profits. Because this commission is really the point of the transaction, it is haram according to sharee’ah for several reasons: 

1 – It involves riba of two types, riba al-fadl (involving exchange of goods of the same type but of different quantity) and riba al-nasi’ah (involving deferred payment of a larger amount than would be paid if it were paid immediately). The participant pays a small amount of money in order to gain a lot of money, in other words he pays cash for cash of a different amount and with deferred payment. This is the kind of riba that is forbidden according to the texts and to scholarly consensus. The product which the company sells to the agent is simply a screen for this transaction; it is not what the participant is seeking and it makes no difference to the ruling. 

2 – It is a kind of gharar (ambiguous/uncertain transaction) that is forbidden in sharee’ah, because the participant does not know whether he will be successful in finding the number of purchasers (participants) required or not. No matter how long pyramid or network marketing lasts, it must inevitably reach an end, and when a person joins the pyramid he does not know whether he will be in a higher level and thus make a profit, or in the lower levels and thus make a loss. The fact of the matter is that most of the members of the pyramid lose out, except for the few at the top. So what usually happens is loss, which is the case of all ambiguous transactions. One of two things may happen, and it is usually the one that is most feared. The Prophet (peace and blessings of Allah be upon him) forbade ambiguous transactions, as was narrated by Muslim in his Saheeh. 

3 – This transaction involves cheating, deceiving and tricking people, by showing the product as if that is the purpose of this transaction((((tum logo ki typing)))), when that is not the case, and by enticing them with the idea of large commission which people do not usually earn. This is the kind of deceit that is forbidden in sharee’ah. The Prophet (peace and blessings of Allah be upon him) said: “Whoever deceives us is not one of us.”



These commissions are (((((only)))) paid for the purpose of joining the network marketing scheme, no matter what names are given to them, whether they are called gifts or anything else. That does not change their nature or the ruling on them in the slightest.