The Justice Department announced on Tuesday that it has reached a settlement with PayPal Inc. to resolve a fair lending investigation into an investment program that was created for black and minority-owned businesses.
Under the terms of the settlement, PayPal will establish a new Small Business Initiative that explicitly removes race, national origin and other protected characteristics from any eligibility requirements. The initiative will include a fee-waiver program covering $1 billion of processing volume, which PayPal has valued at roughly $30 million, for eligible U.S. small businesses that are veteran-owned or engaged in farming, manufacturing or technology.
Settlement terms and company commitments
As part of the agreement, PayPal has agreed to several operational and compliance steps. The company will:
- Designate a director to oversee the Small Business Initiative;
- Conduct an assessment of the needs of American small businesses;
- Submit plans and proposals for the initiative to the United States;
- Provide training to employees on the Equal Credit Opportunity Act; and
- Produce annual reports on the initiative.
Government commentary
Acting Attorney General Todd Blanche commented on the settlement, saying, "This Department of Justice is delivering on President Trump’s vow to root out illegal DEI from every corner of corporate America. American corporations are on notice: you will face our aggressive enforcement if you use race or national origin to discriminate against qualified Americans."
Assistant Attorney General Harmeet K. Dhillon of the Civil Rights Division stated, "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."
Background on the prior program
PayPal introduced the Economic Opportunity Fund in 2020 to direct investments to black and minority-owned businesses. That program expressly gave preference to businesses on the basis of race, color and national origin, and the company did not implement it as a remedy for any identified instances of past discrimination, according to the settlement language.
The settlement resolves the Justice Department's fair lending inquiry by replacing the prior, preference-based approach with a race-neutral Small Business Initiative and sets out monitoring, training and reporting obligations for PayPal going forward.