Sheikh Sajid Umar

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Islamic Ruling on Receiving Referral Fees offered by Businesses as part of their Referral’s Program?

January 19, 2023 by Sajid Umar 2 Comments

Question:
What is the ruling on receiving referral fees offered by businesses to their clients as part of their referral’s program?

Answer:

باسم الله والحمد لله والصلاة والسلام على رسول الله وعلى آله وأصحابه ومن والاه

May Allah reward you for your question.

In terms of the program in question; then as long as there is no fee to be paid to be a part of the program, and the relationship between the business offering the referral reward fee and the customer acting as the referrer is not one of a lender and borrower from an Islamic Jurisprudence perspective (for example: NOT between a bank and its customers), the referral fee paid to the referrer will be deemed PERMISSIBLE, and the contractual arrangement between the two parties will be equivalent to the Ja’aalah contract discussed in the books of Islamic Jurisprudence, which is considered permissible by the vast majority of the Islamic Jurists (may Allah have mercy upon them).

Regarding the rewards given by the business to the referee for signing up for the referral program, this is also ACCEPTABLE and will be viewed as a gift from one party to the other from the perspective of Islamic Jurisprudence (Fiqh), provided that the two parties do not have a lender-borrower relationship as previously stated.

Furthermore, if the organisation providing the referral programme isn’t a business selling product or services, but an investment firm; it would not be allowed for the firm to pay any reward fees to the referrer and referee as part of the referral rewards programme using funds received for actual investments from the referee or from capital gains realised on behalf of the investor as a result of the investment of those funds by the firm, but rather paid from the firm’s own profits.

This answer is exclusive to businesses and investments that are considered permissible (Halal) Islamically.

Finally, whilst this answer is carefully shared in relation to the question asked, Islamic Law prefers for those seeking Islamic Rulings to physically engage specialists in Islamic Jurisprudence (Fiqh) who are renowned for their responsible scholarship, as actual circumstances regarding the topic at hand can differ from person to person, which may affect the ultimate Islamic Ruling with regards to that person. The Islamic Finance Advisory of the the Islamic Council (IC), which is a non-profit service headquartered in London, is an excellent resource for Muslims globally to engage for their faith-based financial matters and affairs.

And Allah knows best.

Sh. Dr. Sajid Umar
Blackburn, United Kingdom
25/06/1444
18th January 2022

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Filed Under: Articles, Islamic Finance, Rulings & Advice (Q&A) Tagged With: Business, Fatwa, Islamic Finance, QA, Referral Fees, Ruling

Comments

  1. Zubair Ishaq says

    January 19, 2023 at 3:55 pm

    Interesting point. JazakAllahkair for the insight..

    Reply
    • Sajid Umar says

      January 20, 2023 at 9:47 pm

      Baarakallahufeekum

      Reply

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