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DOJ Settles With PayPal Over Diversity Investment Program

By  |  May 12, 2026
PayPal

The U.S. Department of Justice has reached a settlement with PayPal over a venture capital investment initiative that federal officials said unlawfully favored certain businesses based on race and national origin. Under the agreement, the company will establish a new small business support program and provide approximately $30 million in financial benefits through waived transaction fees, according to Reuters.

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    Federal officials said the case focused on PayPal’s Economic Opportunity Fund, which was launched in 2020 during the COVID-19 pandemic. The initiative was introduced at a time when many major corporations were expanding diversity programs and financial support efforts aimed at minority-owned businesses. According to the Department of Justice, the program gave preference to businesses owned by Black and other minority entrepreneurs when distributing investment support, per Reuters.

    Related: UK Watchdog Opens Antitrust Investigation Into PayPal, Visa and Mastercard

    The Justice Department said the structure of the program violated the Equal Credit Opportunity Act, a federal law that prohibits discrimination in lending and other financial decisions based on race, color, religion, national origin, sex, age, marital status, or other protected characteristics. Officials said that while companies may support underserved communities through a range of lawful initiatives, financial programs that directly condition eligibility on race or national origin can run afoul of federal law, according to Reuters.

    A PayPal spokesperson said “For more than two decades, PayPal has helped small businesses start, scale, and thrive by expanding access to digital financial tools. We’re excited to launch the Small Business Initiative to infuse American small businesses with even more economic opportunity.”

    As part of the settlement, PayPal did not admit wrongdoing. However, the company agreed to discontinue the previous structure of the program and replace it with a broader initiative for small businesses. The new effort will focus on businesses that are veteran-owned or connected to industries such as farming, manufacturing, and technology, per Reuters.

    Source: Reuters