The U.S. Department of Justice announced Tuesday that it has reached a settlement with PayPal Inc. to resolve an investigation into a 2020 initiative the department characterized as giving preferences to Black and minority-owned businesses.
Under the terms of the settlement, PayPal will introduce a program that waives processing fees on up to $1 billion in transactions for eligible small businesses in the United States. The department estimates the waived fees will total about $30 million. Qualifying businesses include those that are veteran-owned or that operate in farming, manufacturing or technology, according to the Justice Department statement.
The agreement does not require PayPal to pay a monetary penalty to the government. The Justice Department made no finding that the company violated the Equal Credit Opportunity Act, the law that prohibits creditors from discriminating against applicants based on race, color, national origin or other protected characteristics.
PayPal "expressly denies any liability" connected to the 2020 program, language that appears in the signed agreement. The settlement document was signed on Monday by Assistant Attorney General Harmeet Dhillon and PayPal CEO Enrique Lores.
The matter centers on a one-time $530 million commitment PayPal announced in June 2020 to support Black and underrepresented minority businesses and communities. PayPal described that commitment at the time as aimed at supporting and strengthening Black and underrepresented minority businesses and communities over the long term, and at helping to drive financial health, access and generational wealth.
Context and mechanics
The settlement directs PayPal to implement a separate fee-relief initiative targeted at a subset of small businesses within the U.S. The department's statement identifies the categories eligible for waived processing fees - veteran-owned businesses and small firms in farming, manufacturing and technology - and places the aggregate transaction cap for the relief at $1 billion, with the fee relief valued at about $30 million.
Signatories and legal posture
The formal agreement includes explicit denial of liability by PayPal and contains the Justice Department's acknowledgement that it did not make a finding of a statutory violation under the Equal Credit Opportunity Act. The document bears the signatures of Assistant Attorney General Harmeet Dhillon and PayPal CEO Enrique Lores.
Implications for stakeholders
The settlement provides fee relief for a defined set of small businesses while resolving the department's inquiry. Beyond the terms described in the agreement, neither additional penalties nor other remedial measures are specified in the announcement.