We have to differentiate between the Shari`ah-based rulings on chain pyramidal commission and selling gold. 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 not complete disclosure.
However, gold, silver and currencies are something different. Their exchange is called in Shari`ah a sarf contract. In a sarf contract there must be IMMEDIATE DELIVERY AND PAYMENT AT THE VERY TIME OF SALE CONTRACT.
Dr. Monzer Kahf, a prominent economist and counselor, states:
“The issue of commission has only one bearing, and that relates to transparency. Once relations and commissions are completely transparent to new customers so that they don’t think of themselves as lured by honest unbenefitting friends, there must be no problem. Also, sale at a price that is a little higher than the market price is not a big deal as long as the difference is not substantial (one third or more, as one third makes it in the level of ghabn according to some schools of fiqh). Also, the social activities of the company are a different matter that does not affect the Shari`ah ruling unless they support aggressors against human rights of Muslims and others, such as giving financial support to the aggressors and occupiers in Palestine.
The important issue in this company is the sale of gold. Gold, silver and currency can only be sold cash (including handing over of money, credit cards, check, bank transfers) and payment and delivery of gold must be done at the same time and at the time of the contract. This is a necessary condition for sale of currencies and gold and silver. It came in an authentic Hadith of the Prophet (peace and blessings be upon him).”
Chain pyramidal commission: Is It Permissible?
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