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MLM began to grow in Malaysia around 1980, and now many MLM companies have merged under the Malaysian Direct Selling Association, or Direct Selling Association 0f Malaysia (DSAM) with 69 MLM companies monitored by the Ministry of Domestic Trade, Cooperatives and Consumerism (KPDNKK)

 

Multi-story marketing (MLM) is very popular in Malaysia. In 2007, some members recorded a combined sales turnover of more than RM2.7 billion, and more than 3 million people became sales representatives. However, to date there are still not many scholars who discuss such a marketing system in more detail, with strong arguments. If viewed from the economic aspect, MLM is one of the important resources to the national economy, but from the syariah point of view, a question that arises is, is MLM a business that is legalized by Islam?

The MLM marketing system is basically something that is allowed in Islam, as it does not contradict the basic conditions in muamalat. There was a discussion regarding MLM in Islam with Muzakarah Jawatankuasa Fatwa Majlis Kebangsaan Bagi Hal Ehwal Ugama Islam Malaysia Ke-72 Kali that in conference on 23 Jan 2006 have been discussing about (MLM) in accordance to the Islam. The party has decided that the concept, structure and business laws of Multi Level Marketing (MLM) approved by the government should and should not contradict the Islamic business concept. As long as it abides, then it should be fine. 

 

MLM Can Be Illegal If : 

I read about MLM before and I quoted, according to Ustaz Dr. Zaharuddin Abdul Rahman in an article, MLM can be illegal if there are the following elements:

 

1) The Price Is Higher Than Usual

 

MLM products that are sold at a higher price than usual are not encouraged in Islam, and some scholars state that they are illegal and void. In fiqh terms, it is called ghabnun fahisyh, and scholars have categorized its law into three, namely, haram, makruh, and harus.

 

Ghabnun is a scam committed by sellers. It was done by raising the price of certain goods, because in it there are hidden fees that was included such as membership fees and so on. For example, a mobile phone was originally worth RM500, however, the MLM trader sold it for RM900 because it was included with the membership and became a downline to the seller.

 

But not all ghabnun are haram, the scholars have divided them into three types, hence ghabnun in which there are only elements of fraud are not allowed, and become haram in MLM business.

 

2) Personal Purchase Targets As A Condition Of Commission

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MLM businesses usually require a specific sales target as a condition of receiving commissions, when the sales target fails to be obtained, then lose the eligibility to earn commissions even if his subordinates succeed.

 

3) Commission

The commission earned based on the results of the effort to sell goods is a must, because it is in accordance with the wage agreement. the commission will turn into shubhah when it is in the following situations:

 

  • The trader is bound by certain conditions such as sales targets, as they are included in coercion.
  • Commissions earned from the efforts of persons under him who are unknown, and have no effort from such income.
  • When the commission on the person recommending a product is also subject to the terms of sale, and differs from the original agreement of wages.

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