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PURPOSE
Direct Sales Business Guidelines In Multi Level Marketing (Multi-Level Marketing) According to the Shariah is provided for the purpose of providing guidance to the company's direct sales business plan based on multi-level marketing (MLM), the participants, including distributors, sales representatives or agents, buyers, the who are involved directly or indirectly in the business and the public to ensure that the direct sales business in line with sharia principles.
BACKGROUND
2. Direct sales business conducted in general and in particular MLM is one form of business has contributed to the income of individuals and the economy. Businesses in this category to be a platform that provides space and opportunity for the public to increase household income generating livelihood on a regular or incidental to improve living standards.
3. However, multi-level direct sales business (MLM) has made many polemics in relation to the status from the perspective of Islamic law. In this regard, the Dialogue Fatwa Committee, National Council for Islamic Affairs Malaysia Ke-72 time is sitting at 25 to 26 February 2006 has decided that:
"The concept, structure and business legal multi-level marketing (MLM) which was approved by the Government is a must, and do not conflict with the business concept of Islam".
4. Advanced decision, a committee was formed to develop guidelines on business practices. The committee consists of experts in the field of paka-sharia and related agency representatives as follows:
(I) Dr. Zaharuddin bin Abd. Rahman
International Islamic University Malaysia
(Ii) En. Mohd. Talal bin Abu Bakar
Ministry of Domestic Trade, Cooperatives and Consumer Affairs
(Iii) DJ Keramat Keramat Ali bin Ahmad Fadzil
International Islamic University Malaysia
(Iv) Ustaz Wan Wan Husin bin Rumaizi
International Islamic University Malaysia
(V) DJ Zaharudin bin Muhammad
Alliance Islamic Bank's Shariah Advisor and Prudential BSN Takaful
5. Draft Guidelines have been formulated by the committee was approved and reviewed by the Review Panel Meeting Shariah-74 Jakim time to 24 to May 26, 2011. Furthermore, the Dialogue Fatwa Committee, National Council for Islamic Affairs Malaysia Ke-95 time is sitting at 16 to June 18, 2011 has agreed to recommend the Direct Sales Business Guidelines In Multi Level Marketing (Multi-Level Marketing) According to the Shariah.
OBJECTIVES
6. Guidelines were established to achieve the following objectives:
(A) to refine the results of the Dialogue Fatwa Committee, National Council for Islamic Affairs Malaysia to outline the criteria required and prohibited in the MLM direct selling business, and
(B) serve as reference and guidance in relation to the MLM direct selling business in accordance with Islamic law to ensure fairness and transparency to all parties involved in this business.
DEFINITIONS
7. For the purposes of these guidelines:
(A) "Marriage" means the agreement between the company and participants who have understood and agreed by both parties in accordance with Islamic law.
(B) "goods" means property of every kind whether tangible assets (tangible) or intangible assets (intangible) and assets in the form of real or virtual. The property must also be other than choses in action, negotiable instruments, shares, debentures and money.
(C) "Bonus" means the amount of commission payments as promised and paid to the participants as a reward to players being able, either alone or in groups, resulting in the outcome-the outcome as stated in the contract and detailed in a marketing plan or defined benefit plans.
(D) "Electronic" means technology that uses electrical, optical, magnetic, electromagnetic, biometric, photonics, or other similar technology.
(E) "intangible property" means any goods or services that do not have a clear value or benefits to participants and users.
(F) "Incentive" means something given or offered as an inducement or encouragement.
(G) "direct selling" means selling directly from the distributor to be appointed to the customer without going through layers of wholesalers and retailers in layers include door to door sales, mail order or sales through electronic transactions. 4
(H) "Door to door sale" means sale of goods or services conducted in the following way: A person or any person authorized by him to:
(I) go from one place to another than a fixed place of business, or
(Ii) to make phone calls to find people willing to enter into contracts as a purchaser for the sale of goods or services.
The first-mentioned person or any other person then or subsequently enter into negotiations with the prospective purchaser with a contract.
(I) "mail-order sales" means the sale of goods or services by any person, whether himself or through any person authorized by him, by accepting an offer for the sale by mail.
(J) "Sales through electronic transactions" means the sale of goods or services electronically by using the marketing network for the purpose of obtaining a commission, bonus or any other economic benefits.
(K) "Commission" means the wages paid to attorneys or agents for selling goods or services.
(L) "Services" means any rights or benefits except for goods and performance of work under a contract of service.
(M) "Participant" means a person who takes part in the direct sales business in MLM as a party that entered the contract with 5
direct selling companies, including distributors, dealers or agents and buyers.
(N) "Products" means goods or services.
(O) "pyramid scheme" means any scheme, arrangement, plan, operation or process chain bonus or benefit is derived solely or primarily from the recruitment or recruitment of participants in the scheme, plan, operation or process chain with sales pyramid goods, services or intangible property by participants.
DIRECT SALES BUSINESS MARKETING PLAN
8. There are three types of direct sales business marketing plan as follows:
(A) Multi Level Marketing Plan (Multi-Level Marketing Plan / MLM)
(I) the Company shall appoint a person as a participant to sell goods or services.
(Ii) Participants will also appoint other individuals to form networks in which (refer) to sell goods or services. The process of recruitment of new participants may continue to a reasonable level.
(Iii) Each participant will receive a commission, bonus or other economic benefits from a private sale and the sale of or dealers in the network or in a group (overriding bonus).
(B) Marketing Plan A Level (Single Level Marketing Plan)
(I) the Company will appoint a representative or agent or sponsor the sale and pay the salary or commission or a combination of salary and commissions on their sales.
(Ii) representatives or agents are not allowed to appoint or to sponsor other representatives or agents.
(C) Sales through Mail Order (Mail Order)
Sale of goods or services by any person, whether in person or through any person authorized by post.
DIRECT SALES BUSINESS CRITERIA MULTISTAGE (MLM) THE PERMISSIBLE BY ISLAM
9. Direct sales business multi-level marketing or multi-level marketing (MLM) which is required by Islamic law, taking into account maslahah and justice parties transactions as well as legal provisions, contains the following features:
(1) Registered and licensed
Company must be registered under the Companies Act 1965 and have a valid license to do business direct sales Direct Selling Act and the Anti-Pyramid Scheme 1993.
(2) Direct Sales Contracts In Writing
(A) The Company shall prepare a written contract that contains terms and conditions of a clear description of the agreement between the company and participants.
(B) The terms and conditions of the agreement shall be understood and agreed by the company and participants.
(C) The contract shall contain the clause "THIS CONTRACT IS SUBJECT TO THE COOLING-OFF PERIOD FOR TEN WORKING DAYS" printed in block letters in print not less than 18 point Times.
(D) The contract should be signed or shall be in accordance with law to be signed by representatives of companies and new players join a direct sales company.
(E) A participant may cancel the contract at any time before the expiration of the grace period, stating its intention to terminate or withdraw from the contract.
(3 ) Cooling-off Period
(A) the cooling-off period is a period of not less than ten working days from the date of entry that allow a participant to cancel or withdraw participation in the direct sales business.
(B) In the event of cancellation of membership, the company must return the entire membership fee paid by participants.
(C) If the buyer makes the purchase and intends to return the goods have been found not suitable, the buyer is entitled to do so before the expiration of ten days, and the company must return the entire money or the price the item.
(D) The purchaser also reserves the right to return goods purchased if found to not meet the required specifications. 8
This is based on al-syart khiyar the option to cancel a contract after a few days as agreed by both parties.
(4) Membership Fees On the Minimum Rate
(A) the prescribed fee, if any, shall at a minimum covers the cost of management and printed materials are included in the sale of equipment containing a marketing plan and code of ethics.
(B) Using either the registration fee if dtetapkan by the company without payment of fees charged by the company if not, players automatically have become members or distributors, sales representatives or agents for direct selling companies.
(C) Membership fees shall not at a pace that is reasonable and so high that it no longer remains in accordance with the capacity to cover the cost starter kit or the business tools provided by the company during the registration but more towards the source of payment to the recruitment of new members as the basis pyramid schemes.
(D) Payment of entry fees without any consideration or exchange goods or services, except for a reasonable sum to cover the cost starter kit or business tools and the like are contain elements of riba al-fadhl and riba al-nasi'ah, which is putting some money (entry fees ) in cash in order to obtain a sum of money that occurs more grace.
( 5) Purpose To be participants
The purpose of participating in direct selling company should be clear and consistent with legislation such as the following resolution:
i) buying and using goods or services produced or offered by the company to enjoy the privileges and incentives that have been prescribed and / or
(Ii) a distributor, representative or agent selling the goods or services produced or offered by the company to enjoy the privileges and incentives that have been set.
(6) Wedding In Direct Sales Business
(A) Marriage between the company and participants must be clearly defined between the company and participants.
(B) Subject to (a), and by not denying the possibility of the use of other obligations, essentially the main contract in the direct sales business multi-level marketing (MLM) is a contract al-ju `alah (الجعالة).
(I) Al-ju `alah (الجعالة)
Al-ju `yield is the contract that promises the salaries of those who managed to produce a desired outcome and required by the contracting iatu al-ja'il. This contract is result-oriented nature of Success-oriented rather than outcome-oriented which is oriented effort is required to cause the wages given by al-ja'il and deserve by the person doing the work of al-'amil, when the outcome required by the al-ja' il successfully realized and not merely to make the effort and apply oneself.
For example, to facilitate understanding of the difference between the contract and contract-oriented results-oriented effort, said Mr A said to Ms B: "If teachers would teach my child C that he can read, I paid RM500 teacher". Ms B did everything hard to teach C, but he still can not read. As a result, Ms B is not entitled to the RM500 as promised even have to spend time and energy teaching children to Mr A because here the conditions set by Mr A and Ms B agreed by contract to be results-oriented causes.
Unlike the case if Mr A said to Ms B: "Ms B C help teach my child to read four hours a week for a month, I paid to Ms B RM500". Here, whether C is subsequently able to read or not, as long as Ms B had carried out the work required of teaching children to Mr A, C, reading in the period, then Ms B is entitled to RM500 as promised because the contract here and time-oriented efforts .
Akad al-ju'alah contract generally is not binding on both parties (gyair common) and found to be suitable in practice with MLM practices in which participants are not employees of the company and the company is not the employer to the employee.
In the context of MLM, direct sales company to be al-ja'il or the person making the promise by al-ju'alah contract offered by the prescribed marketing plan and the participant will be al-'amil or executor to fulfill the conditions stipulated wages in the marketing plan and agreed set of participants. Among the participants were between the uplines and downlines a particular contract does not exist other relationships as al-musytarikun fi al-'amal or parties who perform a task together to share their wages through the formula set forth in the marketing plan.
(Ii) Al-Wakala representative ((الوكالة) or agent)
Al-Wakalah is the contract that authorizes the person (al-attorney) to act on behalf of that power (al-muwakkil). Typically companies doing business in MLM direct sales explicitly deny the existence of al-attorney relationship, and al-muwakkil between participants and companies. Therefore, the potential use of this contract occurs in the direct sales business in SLM compared with MLM. In this contract, participants, including distributors, sales representatives or agents perform the task of creating a description of the company, promotion of goods or services, sell goods and services and sign up new members to the company. The Company will pay the salaries, commissions, bonuses or other economic benefits for the task or work when the players achieve sales targets based on the concept of al-ujr or al-ju `yield or a combination. Under the contract al-wakalah, participants or representatives may stop or withdraw at any time when the participants no longer perform the work within the time prescribed by the company such as a year. If participants do not withdraw after this period, the contract will end in itself although it is not known to the company in relation to termination.
(Iii) Al-Wakala bi ujr (باجر) representative ((الوكالة) or agent of wages)
Al-Wakala ujr bi is the contract that authorizes the person (al-attorney) to act on behalf of that power (al-muwakkil). Normally, this contract is applied in the direct sales business a stage. Through this contract, the company will appoint the participants, including distributors, sales representatives or agents perform the task of creating a description of the company, promotion of goods or services, sell goods and services and sign up new members to the company. The Company will pay commissions, bonuses or other economic benefits on the job or work when the players achieve sales targets based on the concept of `alah al-ju. Under the contract al-wakalah bi ujr, both parties do not have to cancel the contract without the consent of other parties.
Note: In terms of fiqh, al-wakalah bi ujr divided into two:
First: Al-wakalah with the concept of al-ju `alah (wages for the work)
Example: "A is representative of B to promote the goods, if unsold goods, 5% will be owned by B."
Al-wakalah with the concept of `alah al-ju, all the jurists' view is not binding, but binding Maliki said if the person receiving the offer has started work or tasks.
Second: Al-wakalah with the concept of Ijarah (wages over time eg a week, year)
Example: "A is representative of B to sell goods to pay RM10 a day." A regular for wages even if not to sell the item.
Hanafi and Maliki view that the concept of Ijarah wakalah binding on both parties. According to the Shafi sect "i and Hanbali schools, they are not binding.
(Iv) Grants (الهبة)
Grant is a voluntary giving by the company is required by Islamic law to the participants.
(V) al-bay '(البيع) (sale)
Buying and selling that occurs between companies and participants or between companies and end-users or between participants and end users.
(7). Principle-based contract-seller interaction Reda (التراضي).
(A) Marriage between the contracting parties shall mutually down-seller (التراضي (when signing the contract. Jurists' consensus that the principle of inter-pleased with the contract seller is the legal conditions.
(B) Islamic law stipulates that the principle of mutual-meredhai pleased occurs when there is intent to give effect to the contract that is free from pressure or coercion. Thus,
a direct sales transaction between the parties shall be based on the principle of mutual-meredhai pleased and free from elements of coercion, manipulation and exploitation.
(8) Features Participants
Each participant is entitled to a direct sales company to enjoy one or a combination of the following privileges:
(I) Obtain a rebate on every purchase and / or receive vouchers or coupons for products offered by the company. The deduction is based on the contract of al-wa'd bi al-grant (promise to give the grant).
(Ii) To commission, bonus or other economic benefits for each purchase or a private sale or the purchase or sale of the network under contract or in a group based on al-ju'alah.
(Iii) Being a distributor for the company's product range to become a separate business entity under direct selling company (independent business owner).
(9) Product Criteria
(A) issued by the company's products consist of halal goods and services and benefits according to Islamic perspective.
(B) products generally have a quality product and safe to use and must be expected in an equitable, reasonable and fair that the products offered are favored targets for purchase by consumers regardless of MLM marketing plan prepared.
(C) This product is not a "mask" or contrivance in a transaction to obscure the features of a pyramid scheme or get rich quick scheme. The strength of the direct selling company is located to the product quality and not on short-term objectives for the purpose of immediate profit alone.
(D) Food products, beverages and consumption of goods sold by the company to get halal certification from JAKIM or halal certification bodies recognized by JAKIM. To ensure the company's management system is mengik ut Islamic principles, it is recommended that direct selling companies to apply standards of MS2400: 2010 Standards on Halal Logistics, MS1500: 2009 Halal Food: Production, Preparation Handling and Storage, MS2200 Applied Products Division-Muslim 1:2008 Part 1: Cosmetics and toiletries-General Guidelines and the MS1900: 2005 Standards on Quality Management System from Islamic Perspective to provide value added to the lawful recognition of the company products.
(E) Product is not made up of ribawi goods such as gold and silver can be traded in grace as it involves elements of interest.
(10) Product Price
(A) Prices of products offered by the company to be reasonable, reasonable, not excessive, and in proportion to the type and quality of goods and services.
(B) Their products are still sought for purchase by consumers at a price that is offered without regard to MLM marketing plan prepared.
(11) Provision of Incentives
(A) The provision of incentives by the company to participants may include commissions, bonuses or other economic benefits.
(B) Payment of commission, bonus or other economic interest in the direct sales business is based on the principle of al-all `is or grant.
(C) Grant of commissions, bonuses or other economic benefits should be based on quantity of sales of goods or services and non-recruitment or recruitment of new participants only.
(D) the direct selling company's marketing plan and plan of incentives aimed at recruitment or recruitment of new participants solely or primarily as a qualification for a commission, bonus or other economic benefits is contained elements of gambling money game or not required by Islamic law.
(E) Upline entitled to receive commissions, bonuses or other economic benefits from the purchase or sale of referrals based on the contract ju'alah parties were united in carrying out any work (al-mushtarikun fi al-a `mal) and the company as a party that promises wages (al-ja'il) as detailed division of the company's marketing plan.
(F) The commission, bonus or other economic benefits to be derived from the sales of products and / or company contributions.
(G) The Company shall specify clearly the work to be done and the outcome and results to be achieved by the participants to be eligible to receive commissions, bonuses or other economic benefits and declare the terms and conditions.
(H) The Company shall give a fair chance to all participants to earn commissions, bonuses or incentives.
(I) States are encouraged to diversify their products to the participants the opportunity to increase sales in order to get commissions, bonuses or other economic benefits. This approach seeks to prevent exploitation of the money system or network games.
(J) the company's marketing plan and providing incentives to plan participants should be stated clearly by the company in a written document that participants should be given the opportunity to understand before entering the contract.
(12) Appointment of Shariah Advisor
(A) The Company shall appoint a Shariah Advisor, comprising at least two Muslims who at least has a degree in the field of Shariah, including studies in Fiqh and Usul Fiqh Transactions.
(B) States are encouraged to appoint a Shariah Advisor who has appropriate experience in the field of recitation.
(C) of the Shariah Advisory should not have any relationships that may affect the position of making independent decisions with immediate family relationship as spouse, child or sibling with the Chief Executive Officer of the Company or the Board of Directors and have no interest in selling company shares directly or its subsidiaries.
(13) Training Program
(A) The Company shall organize training programs for the following purposes:
(I) to introduce the product to the participants, especially for products with specific features of a technical nature and specific features that comply with Islamic law and
(Ii) to give exposure to participants on the marketing methods to increase the company's sales performance in an ethical and legal compliance.
(B) The Company shall organize training programs either free or paid with reasonable entry fees.
(C) Conduct training programs shall be in conformity with Islamic principles, including preserving manners and socializing between men and women.
(D) The company has appointed Shariah Advisor, Shariah Adviser shall be given appropriate space to play a role in providing training, guidance and understanding
about the theoretical and practical adherence to sharia in the direct sales business in MLM for participants to be practiced and appreciated by them.
(14) Repurchase Policy or Payback Policy
(A) The Company shall prepare a written contract that contains terms of the buy-back policy or pay back.
(B) The Company shall buy back any marketable goods sold to participants in the six months to make payments of not less than ninety percent (90%) of the amount paid.
(15) Participant Withdrawal
Any participant may withdraw from participating companies at any time based on the terms and conditions agreed by both parties.
ELEMENTS ALLOWED IN MULTISTAGE DIRECT SALES BUSINESS
10. The elements are forbidden in the direct sales business multi-storey or multi-level marketing (MLM) is as follows:
(1) Containing Element Pyramid Scheme
(A) A pyramid scheme or get rich quick scheme is not to comply with Shariah principles-based gambling or betting (qimar) in game money (money game) that is sponsored by the new downline upline will lose money if it does not seek the participation of other referrals .
(B) a written contract between the company and the participants are not available.
(C) The plan focuses on the search or recruitment of new members (downline) solely or mainly and not the purpose of conducting business through the movement of products to end users as appropriate.
(D) Income of participants in a pyramid scheme or get rich quick scheme generated from the new member fee solely or mainly and not the proceeds from the sale of goods or services.
(E) a compulsory purchase of goods or services or intangible property or the minimum payment or sales requirements imposed as a condition to qualify a person for a bonus or other economic benefits in the scheme to purchase or private sale or the purchase or sale of under it.
(F) Participants are not given the option and required to do the "front-loading inventory" of buying goods or services within a reasonable amount not to exceed the expectations may be sold or consumed within a reasonable period of time.
(G) Purchase of rank or purchase more than one member is an approach that contains elements of a pyramid scheme and as such is contrary to Islamic law.
(H) which set the structure of the bonus payments in accordance with a strict hierarchical order, without allowing participants to skip off payment regardless of actual ability and efforts of participants is contained elements of a pyramid scheme that is contrary to Islamic law. 21
(I) refund policy (refund) or policy buy-back (buy back) not available
(J) Not to allow participants to withdraw from participating in the plan.
(2) Contain Elements fraud, oppression, manipulation and exploitation of the Marketing Plan and Grant of Incentive Plan
(A) The Company shall ensure that the marketing plan and plan incentives are transparent and fair and free from any form of fraud, oppression, manipulation and exploitation that can deceive members or users.
(B) Any element of fraud, oppression, manipulation and exploitation by members or distributors in the search for new members only or mainly to improve the achievement of the target group is forbidden by Islamic law. "Manipulation" means all actions and know-how to deceive people or influence other people stand without knowing the person. "Exploitation" means the act (action) took the opportunity to exploit a person or situation and is not just in the interest or the profits themselves.
(3) Contains Element Coercion
(A) Efforts aimed to find new members must be made through a transparent approach and method, and wise without the element of coercion that can disrupt or cause distress and annoyance to the person who approached.
(B) After each session of the company profile, products, marketing plans and incentives plan, individuals who are approached should be given space and time to think, to make judgments as to whether to become participants or reject the invitation.
(C) Participants shall be given full freedom in the purchase and are not compelled to buy packages of certain products to meet sales requirements to qualify for the bonus scheme or when they might not need a few items in the package or require the goods offered in the package but not on the amount so much as determined.
(4) Contain Waste Element
(A) Purchases in large quantities without reasonable justification simply to get the bonus on offer without having a proper marketing strategy.
(B) purchase products offered by the company to be based on real consumer needs and / or ability to sell the product.
(5) Promising Fixed Gain Without Efforts
Any direct sales company that promised a fixed profit to the participants by giving commissions / bonuses without any apparent effort includes promotional activities and sales of goods or services are contrary to Islamic law because it contained elements of riba.
(6) Includes Elements syubhah
In the context of a direct sales business that is based on multi-level marketing, companies must ensure that marketing plans are free of things that are not clear or syubhah شبهة)) in every aspect of the business including marketing plans, providing incentives, goods and services and other matters related to it to ensure that business conducted is in compliance with Shariah principles outlined by Islam.
CONCLUSION
Direct Sales Business Guidelines In Multi Level Marketing (Multi-Level Marketing) According to the Shariah is in accordance with the provisions of the Direct Sales Act and the Anti-Pyramid Scheme .1993 Therefore, any matters not specified in these guidelines, with the should be referred to the Direct Sales Act and the Anti-Pyramid Scheme .1993 relevant parties should refer to these guidelines to determine the parameters required by the shari'a in relation to direct sales business multi-level marketing.
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