PayPal Settles Federal Probe Into ‘Illegal DEI’ Program Supporting Minority Businesses – AfroTech
PayPal Inc. will forgo an estimated $30 million in processing fees for roughly $1 billion in transactions as part of a settlement resolving a U.S. Justice Department probe into the company’s diversity, equity, and inclusion (DEI) initiatives.
The investigation stemmed from allegations that PayPal violated federal civil rights laws through its Economic Opportunity Fund, an initiative launched in 2020 and designed to support Black and minority-owned businesses, according to a news release.
Inside The PayPal-DOJ Settlement
Under the settlement, PayPal agreed to launch a new Small Business Initiative that excludes eligibility criteria based on race, national origin, or other protected characteristics. The program will waive processing fees for qualifying American small businesses that are veteran-owned or operate in farming, manufacturing, or technology industries.
“This Department of Justice is delivering on President Trump‘s vow to root out illegal DEI from every corner of corporate America,” Acting Attorney General Todd Blanche said in a statement, per the release. “American corporations are on notice: you will face our aggressive enforcement if you use race or national origin to discriminate against qualified Americans.”
PayPal, as part of the settlement, agreed to appoint a director for the Small Business Initiative, assess the needs of American small businesses, and determine how the company can best support them, the news release noted. The financial giant will also provide employee training on the Equal Credit Opportunity Act and issue annual reports on the program.
PayPal denied any wrongdoing under the agreement, and the government did not find that the company violated federal law.
“With this settlement, PayPal agrees that race and national origin should play no part in determining which small businesses deserve its investment and financial support,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. “The Department will use the full range of its enforcement authorities to eliminate discrimination and ensure that all Americans have an equal opportunity to grow their small businesses.”
The Economic Opportunity Fund At The Center Of PayPal’s DOJ Probe
PayPal pledged $530 million in June 2020 to support Black and minority-owned businesses and combat racial injustice following the murder of George Floyd and the resulting social unrest that occurred worldwide, as AFROTECH™ previously reported. The company did not create the initiative to remedy any specific instances of past discrimination, per the Justice Department’s news release.
In October 2020, the financial giant followed through on part of that commitment by announcing a $50 million investment in eight early-stage Black- and Latinx-led venture capital funds, including Fearless Fund, Harlem Capital, and Slauson & Co, according to AFROTECH™.
At the time, PayPal Ventures also outlined a three-month fellowship program for Black and Latinx graduate students focused on business mentorship and professional development.
“Black and Latinx founders have been underrepresented in venture capital funding for far too long,” Dan Schulman, PayPal’s former president and CEO, said at the time.
He added, “By directing our dollars to investors from underrepresented communities, we’re supporting their investment in Black and Latinx entrepreneurs at the earliest stages.”
How PayPal Says It’s Supporting Small Businesses
On Tuesday, May 12 — the same day the Justice Department announced the settlement — PayPal unveiled a new global goal to help 25 million people and small businesses gain the resources, skills, and training needed to thrive in the digital economy by 2030.
The company said the initiative reflects its continued focus on expanding economic opportunity and supporting entrepreneurs through digital financial tools and global financial inclusion partnerships.
“Small businesses are the backbone of the global economy, and at PayPal, we believe digital technologies can help level the playing field,” Amy Bonitatibus, PayPal’s chief corporate affairs and communications officer, said in a statement. “By equipping entrepreneurs with the tools, training, and access they need to innovate and compete, we can help strengthen economic opportunity and resilience in communities around the world.”
