IS MLM marketting halal in shariat?

[Husain]

Recently some of us have installed mall91 app which gives one money he / she spreads this app and share there referral code and share there business deals offer.
So is it halal?

[ca.ahmedali]

MLM Marketing?

What is MLM?
Multi-Level Marketing (MLM) has various names such as Network Marketing, Chain Marketing, Affiliation Marketing, Referral Marketing, Pyramid Selling or Home-Based Business Franchising etc. it has variety of names. Well as it is said what’s in the name. let us first understand what exactly is Multi-Level Marketing or MLM.
MLM is a Marketing Strategy adopted by a company, where in they don’t hire a staff for sales of products/services & sale is done by non-salaried staff. Company had to pay commission to these non-salaried staff for efforts made by them or by their team.
Generally, its like a hierarchy, where in top person is called as “Independent distributors/seller” & he encourage people to join his team & start selling his product. This team of his is known as “Downline”.
Each person adding in downline can act as “Independent distributors/seller” & appoint/create his/her own downline. Thus, creating a multi-Level or Pyramid.
MLM is a sales strategy deployed by companies to encourage existing independent distributors to recruit new distributors.

How Income is generated?
Independent distributors make money by two way firstly through sales made by downline appointed by them, basically a percentage of sales made by downline & secondly by making direct sales of products to customers. It’s a low-cost option for people to earn an additional income by selling products companies product.

Type of MLM compensation plan?
There are three broad category of MLM
1. Binary MLM – Binary MLM Plan known as (2 x n) Matrix Plan whereas the ‘n’ represents infinity.
2. Uni Level MLM – as name sugget it allows you to sponsor only one line of distributors.
3. Matrix MLM – the basic formula of this plan if calculated in width & depth of plan, i.e no of distributors & their downline.

“A report by FICCI-KPMG predicts that with adequate regulatory support, retail sales in direct selling could reach Rs 645 billion by 2025 and provide self-employment opportunities to 18 million Indians by 2025, of which 60 per cent could be women.” – source Direct Sellig

What is the Evil side of this Marketing strategies is when recruiting new Independent distributors inevitably collapse or when no new distributors can be recruited most people except perhaps those who are at the very top of the pyramid, end up with almost nothing. So every person in the chain is important.

How is it MLM different from Direct Sales Marketing (DSM)?
MLM is a different form of DSM, where is an Independent Distributor goes and market a product/services to a particular person & end up in creating either a downline or and end point. It depends the way entire role play is performed.
It is more sort of relationship Marketing or Mouth Publicity.
There are various companies using this Marketing strategies’, to name some big brand we have Amway & Tupperware and many in line

The Legitimacy of Multilevel Marketing?
Generally speaking, there are two school of thought, one who believe that MLM is Legal & other who don’t. MLM is a legal business in INDIA if done within framework. Even a legal MLM end up in an illegal one, by unfair trade practices & exaggerated misrepresentations by certain distributors makes this industry so controversial.

There are numerous illegal and fraud MLM that operate in India to lure more people to buy their products and scam them for their money.

An issue in determining the legitimacy of a multilevel marketing company is whether it sells its products primarily to consumers or to its members who must recruit new members to buy their products. If it is the former, the company is likely a legitimate multilevel marketer. If it is the latter, it could be an illegal MLM scheme.

That is why MLM is also known as DIRECT SELLING.

Instead of using traditional distribution channel (manufacturer – distributor – wholesaler – retailer – consumer), Direct Selling companies sell their products and services directly to consumers. That is why it is called ‘Direct Selling’.

When these consumers or customers like their products and services, naturally they start sharing it with others. Direct Selling companies pay you when people buy their products and services from your recommendation.

A legal MLM is one which make a direct selling to its customers & not to its members who in turn end up making a big investment in product/services.

A legal MLM never promises a quick return rather make you work or train you to obtain new sets of skills. An Illegal MLM pay you for appointment of downline & selling product to members itself.

Any program offering big money but claiming “no selling required” is illegal.

What does Shariyat say about MLM?
Till the point selling is done to direct customers & people in chain are earning for referrals it ok. In any other format it is not as per shariyat kanoon.

PS: plz consult before you setup or invest in a MLM scheme & ensure it is legal within term of respective Land of Law.

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