Q: Please advise regarding below:
There is a group/consortium that allows you to join them for an admin fee of R1000 a month.
The benefit of joining them is that once you are affiliated with them, you get extra discounts from the suppliers with whom they have negotiated better rates for all those who are affiliated with them.
Thus, when I go to any supplier, I just need to mention to him that I am part of this group, and they will give me a 5% or 10% discount due to me being a member of the group.
The benefit of a member is that the group has better buying power and can negotiate better rates which later assist the members of the group.
Besides these discounts negotiated on behalf of the group, they do not provide advertising or any other services to any of the members. Is this arrangement permissible?
A: In shariah, one is able to charge a fee for either selling a product to someone or for providing him with a service or for acting as an agent on his behalf in doing the sale and taking a commission for this service.
In this situation, since there is no commodity of sale being sold, nor is there any service being provided, nor is the person who is being paid this amount becoming an agent to conclude a sale and take commission, this arrangement is not permissible.
Hence, the money that is paid to this group on a monthly basis is being paid to remain part of the group and to be a member of this group. Paying a monthly fee merely to remain a member of a group is not permissible and amounts to riba.
However, if this group is prepared to act for you and negotiate each deal with your supplier on your behalf, then only for such deals where they negotiate on your behalf will it be permissible for you to pay them a fee.
And Allah Ta'ala (الله تعالى) knows best.
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