Hello Sobat Bisnis! In this article, we will discuss the law of MLM business according to NU. MLM business is a business model that has been around for decades and continues to attract many people to earn money. However, with the increasing number of frauds and scams involving MLM businesses, it is important to understand the legal aspects of this business. We will look at the perspective of NU in this article. So, let’s get started!
What is MLM Business?
Before we dive into the law of MLM business, let’s first understand what MLM business is. MLM stands for Multi-Level Marketing. In this business model, the company makes money by selling its products and services through a network of independent distributors. These distributors, in turn, earn commissions by selling the products to customers and by recruiting new distributors to the network. The commission earned by the distributors is based on the sales volume generated by them and their downline. MLM business is also known as network marketing or direct selling.
MLM business has been criticized for its pyramid structure and its resemblance to a Ponzi scheme. However, MLM business is legal as long as it complies with the law and regulations set by the government. Now, let’s see what NU has to say about the legality of MLM business.
NU’s Perspective on MLM Business
NU, or Nahdlatul Ulama, is an Islamic organization in Indonesia that has been active since the early 20th century. NU is known for its moderate and tolerant views and has a significant influence on the Muslim community in Indonesia. NU has also been vocal on various social and political issues in Indonesia.
In 2013, NU issued a fatwa, or religious edict, on MLM business. According to NU, MLM business is legal as long as it meets certain conditions. These conditions are:
- The products or services offered by the MLM company are halal, or permissible in Islam.
- The MLM company provides a clear explanation of its business model and the compensation plan to its distributors and customers.
- The MLM company does not promise unrealistic returns or benefits to its distributors.
- The MLM company does not force its distributors to buy products or services.
- The MLM company does not use deceptive or misleading practices to recruit new distributors.
NU’s fatwa on MLM business is significant as it provides a guideline for Muslims who want to engage in MLM business. However, it is important to note that NU’s fatwa is not binding and other Islamic organizations may have a different view on MLM business.
MLM Business and Islamic Law
MLM business is not explicitly mentioned in Islamic law, also known as Shariah. However, Islamic law has principles that can be applied to MLM business. One of the principles is the prohibition of riba, or usury. Riba refers to the charging of interest on loans or debts. In MLM business, distributors earn commissions based on the sales volume generated by them and their downline. This is not considered riba as the commissions are based on sales and not on interest.
Another principle that can be applied to MLM business is the concept of gharar, or uncertainty. Gharar refers to a transaction that involves excessive uncertainty or risk. In MLM business, distributors may face uncertainty regarding their earnings and the success of the MLM company. However, this uncertainty is not considered excessive as it is inherent in any business. As long as the MLM company provides clear information about its business model and compensation plan, the level of gharar is minimal.
Legal Aspects of MLM Business
MLM business is subject to various laws and regulations in Indonesia. The main law that governs MLM business is Law No. 40 of 1999 on the Regulation of Trade. This law requires MLM companies to obtain a license from the Ministry of Trade and Industry and to comply with certain conditions, such as:
- Providing a clear explanation of the business model and compensation plan to its distributors and customers
- Not promising unrealistic returns or benefits to its distributors
- Providing a clear refund policy to its customers
- Not using deceptive or misleading practices to recruit new distributors
MLM companies that violate these conditions may face sanctions from the government, such as fines or revocation of their license.
FAQ about MLM Business
1. Is MLM business legal in Indonesia?
Yes, MLM business is legal in Indonesia as long as it complies with the law and regulations set by the government.
2. What are the conditions for MLM business according to NU?
The conditions for MLM business according to NU are:
- The products or services offered by the MLM company are halal, or permissible in Islam.
- The MLM company provides a clear explanation of its business model and the compensation plan to its distributors and customers.
- The MLM company does not promise unrealistic returns or benefits to its distributors.
- The MLM company does not force its distributors to buy products or services.
- The MLM company does not use deceptive or misleading practices to recruit new distributors.
3. What are the legal requirements for MLM business in Indonesia?
The legal requirements for MLM business in Indonesia are:
- Obtaining a license from the Ministry of Trade and Industry
- Providing a clear explanation of the business model and compensation plan to its distributors and customers
- Not promising unrealistic returns or benefits to its distributors
- Providing a clear refund policy to its customers
- Not using deceptive or misleading practices to recruit new distributors
4. Is MLM business a pyramid scheme?
No, MLM business is not a pyramid scheme as long as it is based on the sale of products or services and not on the recruitment of new distributors. In a pyramid scheme, the participants earn money solely by recruiting new members to the scheme.
Conclusion
In conclusion, MLM business is legal in Indonesia as long as it complies with the law and regulations set by the government. NU has provided a guideline for Muslims who want to engage in MLM business. It is important for distributors and customers to understand the legal aspects of MLM business and to be cautious of scams and frauds. By following the guidelines set by NU and the government, MLM business can be a legitimate and profitable business model.
