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The increasing development of different kinds of pyramid schemes and their extended activities having no economic value has caused some concerns as to their detrimental and unpleasant effects on economic and social relationships. Of the most important questions raised about such schemes is the legal status of pyramid sale. This article is going to analyze such contracts from the point of view of the Shia Islamic Jurisprudence and Iranian Law. Pyramid transactions are among the examples of obtaining property in a void manner (unjust enrichment) and uncertain or risky contracts which are subject to express prohibition of Islamic jurists, because they involve fraudulent statements and deceitful marketing methods which make false expectations among the new members for unreal benefits . This is despite the fact that mathematical calculations have made clear that almost ninety percent of such members not only obtain nothing but suffer losses. Therefore, the validity of pyramid contracts, because of fraud, is seriously questionable and contrary to pubic order. Furthermore, considering the compulsory nature of the sale and the fact that the network marketing is being extended by means of new members, who are in most cases family members and close friends, the rancor causes enmity among them, when they find that they have incurred detriment, which would, in turn, make the contract contrary to pubic moral. Finally, according to the Shia Islamic Jurisprudence's approach and that of the Iranian Law, pyramid sale can not be regarded as valid contract. It is important to note that pyramid contracts are prohibited and invalid in the developed countries such as France, England, USA and Canada too.

Keywords: Fraud, Gold quest, Network marketing, Pyramid contracts, Pyramid transaction.

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