Is this method of marketing prohibited?

Fatwas / Sales Fatawa / Is this method of marketing prohibited?

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Question

We are a commercial company which sells lawful commodities. We have two ways of calculating our profits: First: Calculation upon completion of a monthly financial period. Second: Calculation upon completion of an annual financial period. Upon calculating the monthly financial period, the company distributes part of its profits as gifts and incentives to shoppers each shopper getting 600 Riyals. Upon completion of a financial year, the company awards every shopper from its profits with a final gift and an incentive of more than 5000 Saudi Riyals out the company’s desire to increase its sales and promote its commodities. Worthy mentioning is that these gifts distributed by the company are not allowances or investment benefits for the shoppers but they are pure gifts and incentives from the company’s profits given to shoppers as a way of honoring them, promoting company’s commodities and as a desire to increase its sales. Based on what has been mentioned, the company does not use the system of withdrawing distribution of gifts and incentives which involves uncertainty but every shopper is given these gifts at the end each monthly and yearly financial periods. I would also like to inform you that the company uses brokerage system whereby a broker is not required to shop. If a person who is not a shopper brings customers he is given 75 Riyals for each customer as payment for his effort. My question is what is the ruling on this? May Allah make you beneficial and guide you to the truth.

طريقة التسويق هذه محرمة

Answer

Praise be to Allah, and may Allah’s peace and blessings be upon the Messenger of Allah, his family and his companions.

To proceed:

The marketing method in question is not permissible because the reality of the monetary incentives in this transaction is that they are part of contracted goods because the buyer pays the price upon buying and gets the commodity then later gets cash incentives after completion of monthly and yearly periods. By so doing, this way of making customers interested in buying will end up involving two types of interest:

1. Interest of delaying

2. Interest of surplus

Interest of surplus is evident in the sense that the buyer pays the commodity price which is 500 to get the commodity and a cash gift of 600 Riyals and more than 5000 Riyals after completion of a financial year. As for interest of delaying; it is realised on delaying to take this monetary incentive except after the completion of monthly and yearly period. The majority of scholars have prohibited that a person pays cash price in Riyals to get a commodity that comes with instant cash incentive, how then will be the ruling if the cash incentive is delayed as mentioned in your question? There is no scholarly difference on the impermissibility of that. The ruling on the issue is not altered by changing the name of this money to “incentive”, “gift”, etc because in actual fact it is stipulated in the contract that it is given after completion of financial periods. It is incumbent to avoid this method and search for other marketing methods.
May Allah reward you and guide you to the truth.

Your brother,

Dr. Khalid al-Mosleh

25 / 10 / 1424 AH