Short answer
Most MLM schemes are not halal in the mainstream Hanafi view. They usually require you to buy in to earn, pay you commission on the sales of people you never dealt with, and work like a pyramid where most people lose money. A plan with a real product, no joining purchase, and commission only for your own sales or real work is a different matter.
Deobandi fatwa bodies rule common MLM plans impermissible: a purchase made a condition for joining a commission scheme is two contracts tied into one, commission on deep downline sales is pay without work, and the structure carries gharar and a gamble-like element. Direct sales commission for a halal product is permissible.
The four schools agree on this.
Explanation
Multi-level marketing (MLM), or network marketing, pays you for selling products and also for recruiting others, with a share of what your recruits and their recruits sell. The scholars look at how the money really flows.
Common problems:
- Pay to join. A starter kit, a monthly purchase target or a fee is a condition for earning commission. Tying a sale to a separate earning contract is two deals in one.
- Pay without work. Commission from the sales of people several levels below you, whom you never trained or served, is not a fee for your work.
- Gharar and a gamble. People pay in on the hope that a team will grow under them. Most participants earn less than they spend, while a few at the top gain from the losses of the many.
- Inflated products bought mainly to stay qualified, and pressure on family and friends.
Mainstream Hanafi fatwa centres, including Darul Uloom Deoband, have ruled such plans impermissible. Some scholars allow network marketing that is structured differently: a real, fairly priced halal product; no joining purchase or fee; commission for your own sales; and, if any override is paid, only for real training and support of people you directly recruited. If a plan meets these, it is closer to ordinary commission.
Pure pyramid schemes, where income comes from recruitment and not from selling anything real, are haram by every view. Before joining any plan, ask a mufti to read the compensation plan itself, not the sales pitch.
Ask a mufti about your own case. This answer explains the general ruling. When the details of your situation matter, as they do here, ask a qualified mufti and give them the full facts. Where to ask a scholar.
The evidence
Quran, Surah An-Nisaa 4:29
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ لَا تَأْكُلُوٓا۟ أَمْوَٰلَكُم بَيْنَكُم بِٱلْبَٰطِلِ إِلَّآ أَن تَكُونَ تِجَٰرَةً عَن تَرَاضٍۢ مِّنكُمْ ۚ وَلَا تَقْتُلُوٓا۟ أَنفُسَكُمْ ۚ إِنَّ ٱللَّهَ كَانَ بِكُمْ رَحِيمًۭا ﴿٢٩﴾
O you who have believed, do not consume one another's wealth unjustly but only [in lawful] business by mutual consent. And do not kill yourselves [or one another]. Indeed, Allah is to you ever Merciful.
Income drawn from the losses of others down the chain is consuming wealth unjustly.
Sahih Muslim 1513
Sahih... عن بيع الحصاة وعن بيع الغرر ...
"He forbade the pebble sale and the sale involving gharar."
Paying in on an uncertain hope of downline income is gharar.
Jami' at-Tirmidhi 1231
Graded sahih... نهى رسول الله صلى الله عليه وسلم عن بيعتين في بيعة ...
"The Messenger of Allah forbade two sales in one."
Making a purchase a condition for a separate earning contract ties two deals into one.
Where the ruling is recorded
- Radd al-Muhtar (Ibn Abidin), Kitab al-Ijara, Bab al-Ijara al-Fasida, on the broker's fee. A broker earns for his own work, which is the basis for allowing direct commission only.
- Radd al-Muhtar (Ibn Abidin), Kitab al-Buyu', Bab al-Bay' al-Fasid, on a sale with a condition. A sale tied to a condition that benefits one side is defective.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.