Fatwa on Network Marketing (Questnet et al)

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Fatwa on Network Marketing (Questnet et al)

Postby abuali » 29 Apr 2007, 00:56

Salaams all

Over the last few months, many youngsters and adults alike have become involved in what is known as network marketing.

Hence, a lot of questions about it have been put forward. Lucky enough for us, Maalim Murtaza Alidina has put forward to us the fatwa regarding it from Ayatullah Sistani.

Ayatullah Sistani (may Allah protect him) has termed such transactions haraam as well as invalid (baatil)

In addition, those who had joined and didnt know it was haraam, (hence it was not a sin for them at the time of joining), need to either return the asset bought or if they cant find the owner then with the permission of Aga, give it to sadka and if possible try and recover their money.

The money earned from such transactions is haraam. Aga can be refered as to what to do with such money.
Last edited by abuali on 01 May 2007, 21:11, edited 1 time in total.
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Re: Fatwa on Netwrok Marketing (Questnet et al)

Postby FatemaC » 29 Apr 2007, 08:25

Thanks :!:
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Re: Fatwa on Netwrok Marketing (Questnet et al)

Postby qarrar » 29 Apr 2007, 16:57

hasin wrote:network marketing


Can anyone care to explain what exactly this is :?: (i.e. the practice Aga has outlawed)
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Postby Zaheer » 29 Apr 2007, 21:09

man ppl eat up my head by telling me to join NETWORK MARKETTING
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Postby kulsham » 29 Apr 2007, 22:24

what's a Network marketing? sounds familiar!!
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Postby Muhammad Mahdi » 30 Apr 2007, 16:32

Multi-level marketing (MLM) (also called network marketing) is a business model that combines direct marketing with franchising.

Multi-level marketing businesses function by recruiting salespeople (also called Distributors, Independent Business Owners, IBOs, Franchise Owners, Sales Consultants, Beauty Consultants, Consultants, etc.) to sell a product and offer additional sales commissions based on the sales of people recruited into their downline, an organization of people that includes direct recruits, recruits' recruits, etc. This arrangement is similar to franchise arrangements where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager, but in some MLM programs, there can be seven or more levels of people receiving royalties from one person's sales.

(Wikipedia)

Why should network marketing be considered haraam?
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Postby Zaheer » 01 May 2007, 19:50

pls can any1 give a perfect answer for that as my mind comes through doubts
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Postby abuali » 26 Jul 2007, 01:05

Salaams

My apologies for the delayed response. Work has been keeping me really busy.

So, the fatwa and explanation by Dr. Alidina was directly refering to the network marketing schemes such as QuestNet or otherwise known as GoldQuest.

Being the lazy person I am, instead of writing an explanation, I am giving links to references and discussions on the greater evil of such schemes.

The reason i have started this topic is that many of us have become involved in this scheme as it is marketed to us in such a way so as to make us feel we can make some good money quick without much work.

Quoting from the link below, these sentences describe such schemes best: -


Finally, remember the old saying “If it sounds to good to be true, it probably is.” ?

Anyone who tells you you can make huge amounts of money, with very little investment, and very little work, is almost certainly not telling you the truth.


http://bahrainidrivel.com/?p=195 This is a god blog if you want to know what networking marketing actually is

Here are some more links: -

http://in.answers.yahoo.com/question/in ... 021AAgqJv3

A warning by the Napali Government
http://www.kuenselonline.com/print.php?sid=3633

A warning by the Philippine Government
http://www.inq7.net/nat/2003/aug/19/nat_10-1.htm

A warning by the Sri Lankan government
http://www.lankabusinessonline.com/full ... catcode=11

a Report on action by the Indian police on GoldQuest
http://www.hinduonnet.com/2003/08/22/st ... 240300.htm

Some miscellaneous stories of the scam/fraud
http://www.manilatimes.net/national/200 ... top11.html

http://www.domain-b.com/companies/compa ... 08_job.htm

http://www.fraudsandscams.com/examples.htm

http://www.lankabusinessonline.com/new_ ... =184664176

http://southasia.oneworld.net/article/view/89307/1/33

http://www.mouthshut.com/review/GoldQue ... 567-1.html

(or simply Log into http://www.mouthshut.com and search for Goldquest)

And an interesting thread mentioning the fact that now its scamming people in Tanzania

http://forums.vr-zone.com/showthread.php?t=19179

I think this should be enough for now
Last edited by abuali on 26 Jul 2007, 01:28, edited 1 time in total.
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Postby abuali » 26 Jul 2007, 01:08

oh oh

the founder of questnet is on the interpol wanted list...

http://www.interpol.int/public/Data/Wan ... _13855.asp

and the malaysian big boss was arrested.

Quest International (QI) group Chief Executive Vijayeswaran Vijayaratnam, director Joseph Bismark, and two other senior executives, Donna Marie Imson and Tagumpay Kintanar were arrested Thursday The Jakarta Post reported.


http://www.mouthshut.com/review/General ... 699-1.html

it seems that the 'famous' gold coins with famous people on them are unauthorised!
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Re: Fatwa on Network Marketing (Questnet et al)

Postby abuali » 01 Aug 2009, 12:16

Does anyone know if goldquest has already fallen in TZ?

Anyone lost money in it?
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Re: Fatwa on Network Marketing (Questnet et al)

Postby abuali » 01 Aug 2009, 12:17

Here is a post by Python on http://forums.vr-zone.com/financial-pla ... not-2.html

I have spent fifteen years working for manufacturing, wholesale trading and FMCG companies. I am a qualified accountant and have helped (as part of the senior management team) develop marketing and distribution strategies including strategies for new product launches.

Let me share some of my experience with those who think MLM can work.

Try to look at MLM's from the point of view of a company intending to sell a product and ask your self, if you, sitting in the chair of the sales director(and who will be fired if sales targets are not met) , will ever use MLM to distribute your product.

The answer is never.

Why?

Because:

1. You lose control of the distribution channel completely. (Sales targets are met by salesmen working closely with wholesalers/retailers and attempting to achieve a given volume for a set territory.) Would you rather sell through a wholesaler and a few dozen retailers who you know and whose asses you kick every wee if targets are not met or a network of hundreds and thousands of untrained amateurs who you do not see, do not know and cannot control? Ever seen MLM's programmes wanted trained, qualified and experienced sales staff ? No. The MLM dream is built around the myth that anyone can do it.

2. It is a very expensive and clumsy system of distribution. The strategy in retailing is to minimise the intermediaries between factory and consumer. In MLM EVERY SINGLE individual gets a commission. The myth is spread that MLM involves fewer layers. this is not true, the commission paid to each layer is a distribution cost and MLM must necessarily involve more than the three or four layers for a conventional structure.

Think that this is not true ? Go ask Wal-Mart's competitors, who are being regularly wiped out. By the way Amway the biggest MLM company (founded incidentally in 1956, four years before Wal-Mart) boasts of sales of US$6bn. Wal-Marts annual sales are US$256bn.

And how much SALES does the average guy in Amway do? A little over US$1,000 per YEAR. Think this can give anyone a liveable income?

Still don?t accept the facts?

Go talk to Unilevers, P&G, Reckitts and any other large manufacturer whose products should be ideally suited to MLM (because they are so widely used.) Are they tearing up their distribution systems and jumping on the MLM bandwagon? They would, if it were really as cheap and as clever as its proponents claim.

3. What about the 'wonder products' that MLM's seem to come up with tiresome regularity? All of which are said to be unique, the next best thing to sliced bread.

Well if those products were really sellable a smart [EDITED] would have seized the opportunity to corner the market and get exclusive distribution rights. It's known as economics.

Therefore the only people who are left to sell "unique" products through these MLM distribution structures are scammers who are out to enrich themselves at the expense of the gullible and foolish.

For more information visit the following sites:


www.quatloos.com

www.pyramidschemealert.org
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Re: Fatwa on Network Marketing (Questnet et al)

Postby abuali » 01 Aug 2009, 12:18

And finally a q&a from sistani.org about goldquest
Question: Is it permissible to work in Goldquest companies?
Answer: It is not permissible to enter such business activities.

http://sistani.org/local.php?modules=nav&nid=5&cid=484
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Re: Fatwa on Network Marketing (Questnet et al)

Postby abuali » 01 Aug 2009, 12:21

Interesting to know how the modern, complex schemes such as goldquest orignate from

In the summer of 1920, Charles Ponzi had collected $9.5 million from 10,000 investors by selling promissory notes with the pledge of paying a 50 percent profit in 45 days. He based this promise on his postal coupon enterprise in Boston. As Ponzi paid the matured notes held by early investors, word of enormous profits spread throughout the community, whipping greedy and credulous investors into a frenzy. But there was no profit-earlier notes were paid at maturity from the proceeds of later ones. That scheme linked Ponzi's name with this particular form of fraud. A swindle of this nature is referred to as a "Ponzi scheme."
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Re: Fatwa on Network Marketing (Questnet et al)

Postby abuali » 01 Aug 2009, 12:35

Many brothers and sisters who had been earlier pulled into the scheme are fed information that is nothing but smart lies by their goldquest counterparts.

One of the most common thing they are fed to counter such claims from the public is ' Goldquest is not network marketing, its MLM!'

http://www.quatloos.com/mlm/mlm.htm
MLM: Once Legitimate, Now a Scam

Once upon a time, multi-level marketing was a legitimate business which provided a way for small companies to get their unique products to consumers in small towns and rural areas which had no access to these products. At this time, the products sold themselves, and the multi-level aspect was a way of giving a small reward to those who had worked hard to build the organization. But the focus was always on the product.

Today, and especially with the growth of the internet, it is possible for consumer to get about whatever they want at competitive prices. There is simply no real need for distribution "systems" as there once was, and indeed the focus of all the programs is not on the products they sell -- which are usually either bogus or are available somewhere else to the public at the same or lesser prices. Instead, the focus now is solely on recruiting new people to either buy into the program or else to buy products that are grossly overpriced (i.e., a $1 bottle of "herbal shampoo" for $26), with the idea that those people will recruit additional people who will also buy into the program or themselves buy the grossly overpriced products.

Thus, today just about ALL of the multi-level marketing programs are scams. In today's internet economy, there is simply no need for multi-level marketing or the overpriced products that they sell -- meaning that the only thing they are selling are memberships in anticipation that future memberships will be sold in the future, which is the classic definition of a pyramid scheme, and thus securities fraud.

Because products are available over the internet to everybody at lower costs than ever before, claims that "Multi-Level Marketing will take over the World!" are completely bogus. Indeed, the fact that no MLM schemes sell significant product to anybody other than the people who bought into the programs is proof positive that MLM is a dinosaur in today's economy, and exists only by defrauding people to buy memberships in anticipation of being able to make a profit defrauding other people into the program.

Indeed, as is discussed elsewhere, many of these programs have been broken up for securities fraud and the people in them now have criminal records. So, save your Quatloos and avoid MLM schemes.

Stars! Stars!

Like many advertising campaigns, many MLM programs now attempt to associate themselves with celebrities. "Zig Ziglar goes MLM!" read one spam e-mail we received.

Note that the celebrities didn't make their money in MLM. Nor will you.

Buying Into the Program

So you are being "hired" to sell products, and you have to buy into the program? This is a sure sign that it is a scam. If the product is worth a darn, the company will make its money selling the product. No program that requires you to buy into the program is real, meaning that all our scams.

If you have to buy into the program, forget it! It is not a real program.


Sales Material

Often MLM scams have sub-scams within the main scam of buying Distributorships. One of these scams is the purchasing of advertising materials. Think about it: A company wants you to sell their product but they want you to pay for the advertising materials? Especially with the huge profit margins that the Top Guy makes with these programs, they should at least pay for your brochures and tapes. If a company requires you to pay for advertising or marketing materials, it is a sure sign that it is a scam. The very worst programs will even require you to buy the "samples" of the product that you have paid to be able to sell!

Training Seminars

A scam-within-the-scam is the "training seminars" offered (sometimes required) by the MLM programs. These "training seminars" offer little training, but are mostly rah-rah seminars to boost enthusiasm -- and to make big bucks for the promoters. We have often seen people encouraged to take out thousands of dollars in credit card debt to go to these seminars, with the promise that they will make so much selling the MLM program that they will quickly pay back the credit card debt (this is almost never true).

These training seminars can cost thousands although the company ought to be paying you to attend and learn how to sell its product. No company which requires you to pay for your own training seminar is a real program.

Only The Top People Make Money

The hard truth is that only the guy who sets up the program, i.e., the Big Cheese at the very top, makes any really good money with these programs. Everybody who is selling for the Promoter typically gets screwed.

Nonetheless, the promoters of these programs will often have pictures of themselves standing next to their mansion, yacht, executive jet, whatever, to show their success. Yes, these are real and they did make money by selling programs. Unfortunately, they made this money by cheating and defrauding the people under them to sell these programs for them -- you never see a distributor with anything other than a bunch of credit card debt.


The Drop Out Rate

The "Drop Out Rate" of MLM programs is enormous -- 98% will drop out immediately, meaning that only 2% will continue with the program over any long period of time. The Promoters will tell this 2% that they are the "successful" ones -- what this means is that they have become "successful" scamming other people (who will probably spend their money and then drop out, possibly a big personal loss to them but a profit to the Promoters).

The Promoters know the Drop Out Rate, and know that by far most people will buy in, but then never sell anything and quit, which is one of the reasons why MLM programs are criminal schemes.

The Promoters also tell those who stay in that they are the "well-motivated and lucky ones". This is 100% false. The people who never sold anything and dropped out are the lucky ones, since they will not be liable for securities fraud or any of the related criminal penalties that goes with promoting somebody else into the program. It is the people who stay in the program who are risking some prison time and a felony conviction for selling an unregistered security.

One of the biggest problems of MLM is that they are marketed to people who are down-and-out and desperate, and who can ill-afford to lose their money by purchasing memberships in these bogus programs.

You Gotta Believe!

Promoters tell prospective Distributors that to be successful "You gotta believe!" in the program. This is part of a brainwashing/programming effort to lead you to believe that you will fall into that (falsely) "successful" 2% if you believe in the program and the products that it sells. Thus, active Distributors will defend to great lengths their program and their products, to the point of slandering naysayers, spamming "negative" or competing sites with e-mail to shut them down, threats of physical harassment, etc., etc., not to mention often buying the products themselves in substantial quantity.

But the proof is in the pudding. It is an interesting phenomena of MLM that the hardcore and brainwashed Distributors who defend the products the hardest, almost always quit using those "great products" completely when they move on to the next program!

The point of this is that the 2% of "successful" Distributors have usually been brainwashed and programmed so that they really believe the junk they are saying about the junk they are selling. But that doesn't make it any less junk.

Building that Downline


The promise of MLM is that if you are "successful" (in defrauding others) that you will create this big "downline", i.e., multiple layers of sellers under you, which will quickly lead you to riches and allow you to retire forever with a never-ending stream of seven- or eight-figure revenue.

This promise is totally fraudulent, for at least the following reasons:

1.

As discussed above, the 98% drop-out rate means that you probably will never build a significant downline.
2.

None of these programs last very long (Amway seems to be the sole exception), meaning that as soon as the program croaks your revenue stops.
3.

The odds of anybody in your downline making any money are incredibly small (smaller than yours!), meaning that they will probably "drop out" and be mad at you for getting them into a program where they lost your money -- the upshot being that these people will certainly not follow you to your next program (which will be necessary when your existing program finally collapses), meaning that you will have to build a completely new downline with every new program!

For all these reasons, your chances of long-term residual income with MLM is zero. Even if you are successful, the best you can hope for is a lot of hard work defrauding others to build your downline, some short-term profits until your program collapses or is shut down, and then a lot more hard work defrauding even more people into your next program, and so forth and so on until you get sick of it and drop out of MLM completely.


Buying Your Own Products

To the extent MLM programs sell any product, it is usually purchased by people who -- frustrated by their ability to build a downline and pressured by their recruiters -- will themselves buy mass quantities of the product as an attempted badge of "success". Thus, newbies on the lowest levels will max out their credit cards and buy lots of worthless product themselves in a vain attempt to move on to the next level. Usually, this works only if there is a "buy in" to the next level (more Quatloos for the promoters!) but never means success to the poor sucker buying the products, although he or she will end up with a closet full of vitamins, shampoo, phone cards or whatever -- and usually a lot of credit card debt too.

Fake It 'Til You Make It

Buying your own products is just one aspect of the MLM method of "Fake It 'Til You Make It", meaning that even if you are having zero success, you should act like you are very successful and have already made the Big Time. Many programs will tell people to start living a high lifestyle (on their own credit cards, of course), go lease a new BMW, etc., etc., so that people will believe that you are successful and they will then want to be in the program too.

The problem of course is that only a small percentage are successful in MLM, and these only for the short time until their program collapses. Their debts and BMW leases, however, are long term and require monthly payments to maintain. We have spoken with a few people who were encouraged by Promoters to lease expensive cars, and then were forced to actually live in those cars because they couldn't make the rent (and of course the cars were eventually repo'd from them too, leaving them homeless).

Additionally, the "Fake It 'Til You Make It" is just more fraud on the people you are trying to bring in. Acting like you are making the Big Bucks when you are not is blatanly dishonest -- but all part of the MLM scheme of cheating people.

Heavy-Hitters

A variation of "Fake It 'Til You Make It" is the "Heavy-Hitter" who bounces on the scene and seems very rich, and then acts as a "closer" of new recruits. Whether or not the "Heavy-Hitter" will actually have any money is subject to serious doubt: He may be one of the people living out of his leased BMW! More likely, he has been hired on a pure salary basis by the Promoters to act as a cheerleader and "closer" for prospective Distributors.

The "Heavy-Hitters" usually circulate from program to program, and are often the "Heavy-Hitter" in several MLM programs at the same time. A good way to identify these scam artists is to inquire as to what other programs they are in now, and have been in the future. If they have been in several other programs, you know that you are facing a "Heavy-Hitter", which when you get down to it is just a professional MLM scam artist (and, again, probably on a flat salary no matter what BS they tell you).

At seminars, you will frequently hear the Heavy-Hitter buildup: "Maybe Mr. Such-And-Such" will be here today!" The excitement is such that when Mr. Such-And-Such finally appears, you'd think Moses just came down from the mountain. It is all hype: The Promoters know exactly who will be at these seminars, and they plant people in the audience to make statement such as these, so that Mr. Such-And-Such finally does make his appearance, people attribute to him the credibility of the Messiah. Don't fall for this ruse.

For reference, the "Heavy-Hitter" is not unique to MLM. Casinos have for many years employed "Shills", being people who are hired by the casinos on salary and given a bunch of chips, and sent into the casino to mingle with the other gamblers and spin a few stories of the casino's big payoffs (which may or may not have occurred) -- and of course to gamble the (casino's own) chips and thus encourage others to gamble with the same enthusiasm and similar better levels.

The "Heavy-Hitters" perform the same function with MLM, often coming in to tell false stories about themselves hitting it big with the program. You can admire their gold pinkie rings, and their expensive leather shoes. But avoid these people, and just chuckle at the stories they sell. And be sure to ask them about the lease program on that BMW they are driving!

Fending Off Criticisms

You may see your program mentioned in an unfavorable light, such as on 60 Minutes or 20/20 or some other investigative news program. The Promoters will tell you something like "Their job is to bring down good companies . . .." Bull! Their job is to point out scams, and if your program has been featured on one of these program you can pretty much be sure it is one (if it is an MLM program it is a scam whether it is featured on these programs or not).

Survival Mode

After you have made big investments into the MLM program (or maybe several), are strung out on your credit cards, and the program isn't working out, then you will go into what is called "Survival Mode", where you finally give up the (false) dream of big riches with MLM and start trying to figure out how to hold off your credit card companies while getting back to a normal lifestyle.

Unfortunately, we don't have any special advice to offer. The only thing that we can say is that suicide shouldn't be an option (ex-MLM'ers unfortunately have a very high suicide rate), and that you should simultaneously seek credit counseling, and maybe adult education for re-education for a better job.

Refunds


The worst programs will promise you some sort of refund if it all doesn't work out. These are the worst programs because the refund programs are usually contingent on this-or-that, require long forms and long waits, often the refund is only 30% or so of what you spent, and usually the refunds are illusory (meaning that they company will never pay out the refund to you). The MLM programs which offer refunds do this to create the illusion that there is "no risk" to you -- and this is a 100% fraud because as discussed, you odds of actually getting your money back is infinitesimally small.

At least the companies which don't offer refunds tell you this up front so that you are not suckered into believing this nonsense.
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Re: Fatwa on Network Marketing (Questnet et al)

Postby abuali » 01 Aug 2009, 12:45

This is what i predict will be happening in Tanzania soon :(

referenced companies have been charged or convicted as illegal pyramid schemes.


QuestNet, Alias: Gold Quest, Prosecuted as Fraud in India; Thousands Lose their Savings

Thaindian News, Chennai, May 6th, 2008 (http://www.thaindian.com/)
At least 1,500 people, duped by a multi-level marketing (MLM) firm, queued up at the police commissioner’s office here Tuesday to lodge complaints, officials said. A separate counter was set up to receive complaints against Quest Net, eyewitnesses told IANS.
Police sources said the number of complaints increased vastly following television channels’ broadcasting the issue.
So far, gold worth Rs.235 million has been seized and seven employees of the company have been arrested since Saturday when action was initiated against the firm.
Scores of complainants have alleged they were taken in by the pep talk by the company’s sales staff.
“Not only did I sell my business, but also I pledged jewels of my mother, sister and wife to join the business. Further, I introduced others into this, believing in the scheme and helped them borrow money from banks to the tune of Rs. 100,000. Now we have lost everything,” said Manikandan, a carpenter who lodged a complaint.
“Believing that I was scheduled to get huge returns after receiving a cheque for Rs.2,300, I introduced 30 others who have cumulatively lost over Rs.200,000,” said A. Lakshmi, a resident of the northern suburbs here.
Gold Quest, the parent company of the MLM firm based in Hong Kong, however, has denied any wrongdoing, claiming it was involved in a legitimate commercial enterprise in over 100 countries.
The entity has been banned in Sri Lanka, Indonesia and the Philippines. Action has been initiated against it in Bangalore as well, police sources added.l

Thaindian News,Chennai, May 13
Two of the arrested employees of the multi-level marketing company Quest Net, which has been accused of fraud, may be detained under the Goonda Act, the Tamil Nadu police said. The police have received 8,277 complaints from all over south India against the company, Police Commissioner Naanjil Kumaran told reporters here Tuesday.
So far, Rs.35 million in cash and 87 kg of gold and silver coins besides valuables worth more than Rs.100 million have been seized from the offices of the company.
Quest Net managing director Pushpam Appala Naidu and her assistant S. Augustine may be jailed for up to a year under the Goonda Act, said the police.
In all, seven employees of the company have been arrested on charges of cheating.
Quest Net’s principals in Malaysia have denied any wrongdoing on its or its subsidiary’s part.
Granted police custody by a local court until Thursday, Pushpam and Augustine have been taken to Hyderabad and Bangalore to facilitate opening of bank lockers, the police said.

http://www.pyramidschemealert.org/PSAMa ... India.html

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