Is Affiliate Marketing Halal or Haram? Conditions Explained

The short answer

In general, affiliate marketing is considered permissible (halal). The commission is payment for a service: you act as an advertiser or agent (wakalah) for the seller. It becomes haram when you promote prohibited products or services, such as alcohol, gambling or interest-based products, or when you use misleading claims. Commission terms should be clear and free of gharar.

What is affiliate marketing?

When the Covid-19 pandemic hit and Malaysia went into lockdown, everyone was trapped at home. Not everything was bad: online activity grew sharply, especially on social media, because the virtual world was the only link to other people and the outside world. Many people also lost their jobs, which helped grow a range of new kinds of work known as the 'gig economy'. Affiliate marketing is one of them.

We often see people on social media promoting where they go, what they eat and what they buy, and saying this earns them income. That income usually comes from affiliate marketing. There are many affiliate programmes available, including Amazon Associates, the Shopee Affiliate Program, Airbnb Associates and many others.

The basic idea is simple:

• You promote a product or service online on behalf of a third party.
• You share a link that directs potential customers to the seller.
• The customer deals directly with the third party to complete the order, at no extra cost to the buyer.
• You are paid a commission, commonly based on Pay Per Sale (PPS) or Pay Per Click (PPC).

When affiliate marketing is considered permissible

Income from affiliate marketing is generally permissible because it is based on the service you provide. As an affiliate marketer, you are essentially an advertiser. The ruling on dropship businesses issued by the Mufti of the Federal Territory, Malaysia can be used as a guide here, because dropshipping and affiliate marketing work on the same concept: wakalah (agency). According to the Mufti of the Federal Territory, dropshippers are considered employees or agents for the products or services, acting in a representative capacity under wakalah. However, it is necessary to ensure there is no element of gharar (uncertainty) or deception.

In practice, this means three conditions should be met:

1. The product or service is permissible. What you promote must itself be halal. Your commission follows the nature of what you are selling.
2. The commission is clearly agreed. As an agent, you should know the terms of your payment, such as the commission basis (PPS or PPC) and when it is paid, so the arrangement is free of gharar. Terms vary between programmes, so read each programme's terms before joining.
3. The promotion is honest. You should believe the product or service will benefit the buyer and describe it truthfully.

Promoting products you have not used

A common question is whether you can promote products or services you have not tried yourself. If the items are not haram and you are marketing them in the belief that they will benefit the consumer, it is permitted to advertise them as an affiliate even if you have not tried them.

When it becomes haram

Affiliate income is considered haram in these situations:

• Promoting prohibited products or services. If you market haram products or services, such as alcohol, gambling, interest-based products or forex, the income generated is deemed haram because you are promoting non-halal products and services.
• Misleading or insincere promotion. If you promote products you do not like, do not endorse and do not believe in, yet still try to convince people they will benefit just so you can earn a commission, the income is believed to be haram. From the standpoint of Islamic business ethics, this is also unethical.
• Deception or gharar. Exaggerated claims, hidden conditions or anything that deceives the buyer go against the requirement that wakalah arrangements be free of deception.

What if the buyer ends up purchasing a haram product?

Sometimes an affiliate promotes a halal product, but the customer ends up buying something non-halal through the same link. Is the commission halal? In our opinion, it depends on the platform:

• Platform where most products are haram: If you promote a halal product from a website where most products are haram, there is a high probability that users will accidentally buy non-halal products. In our opinion, the commission from this activity can be categorised as syubhah (doubtful).
• Platform where most products are halal: If users still end up buying non-halal products, in our opinion the commission is permissible, because you cannot control the actions of the user. It was their choice.

Affiliate links for crypto and trading platforms

Many crypto exchanges and trading apps run referral or affiliate programmes. The same principles apply: your commission follows the nature of what you promote. Before sharing a link, check the asset first.

• Check the specific coins or assets you are promoting. Look up their screening status on our crypto Shariah screening page.
• Understand how screening works. Our screening methodology explains the criteria used to assess assets.
• Look at what the platform mainly offers. If most of what a platform offers would not be considered compliant, the syubhah concern described above for platforms where most products are haram may apply to your commission.
• Promote honestly. Avoid promises of guaranteed profits or exaggerated returns, which are misleading claims.

FAQ

Is affiliate haram or halal?

Affiliate marketing is generally considered halal, because the commission is payment for an advertising or agency (wakalah) service. It becomes haram if you promote prohibited products or services, such as alcohol, gambling, interest-based products or forex, or if you use deceptive or insincere promotion.

Is earning commission allowed?

Yes, commission earned for the service you provide is considered halal, provided the product is permissible, the commission terms are clear and free of gharar, and your promotion is honest. If the buyer purchases a non-halal product from a platform where most products are halal, in our opinion the commission remains permissible, as you cannot control the user's choice.

Can I promote crypto exchanges?

It depends on what you are promoting. Check the assets on our crypto Shariah screening page and read our methodology to understand the criteria. Consider what the platform mainly offers, and avoid misleading claims about profits.

Conclusion

Affiliate marketing is permissible in Islam, and the commission earned from the service provided is considered halal. Even so, affiliate marketers are advised to promote only halal products they believe will benefit the user, and to use Shariah-compliant platforms to reduce the risk of users ending up buying non-halal products.

Note: This article is for educational purposes only and is not a personal fatwa. For guidance on your own situation, please consult a qualified Shariah scholar. Wallahua'lam.