DOJ, PayPal Reach $30 Million Settlement Over Race-Based Lending Fund

The Justice Department reached a $30 million settlement with PayPal Inc. on May 12, ending a fair lending investigation into a program the department said violated federal anti-discrimination laws.

The fund at the center of the DOJ’s investigation—PayPal’s Economic Opportunity Fund—was introduced in 2020 with the stated purpose of channeling investment funds to black and minority-owned businesses primarily, the DOJ said. The program extended preferences to businesses on the basis of race, color, and national origin without being structured to remediate any identified, specific instance of past discrimination, according to the department.

Under the agreement, PayPal must establish a new investment program that does not include any consideration of race, color, or national origin.

“This Department of Justice is delivering on President [Donald] Trump’s vow to root out illegal DEI from every corner of corporate America,” said acting Attorney General Todd Blanche, referring to diversity, equity, and inclusion (DEI) initiatives. “American corporations are on notice: you will face our aggressive enforcement if you use race or national origin to discriminate against qualified Americans.”

PayPal must also name a director for the new program, conduct a formal assessment of American small business needs, submit initiative plans to the federal government for review, train employees on the Equal Credit Opportunity Act, and submit annual progress reports to the federal government.

The Equal Credit Opportunity Act forbids creditors from discriminating against applicants based on race, color, religion, national origin, sex, marital status, or age. The Justice Department concluded that PayPal’s Economic Opportunity Fund, however, fell squarely within the statute’s prohibitions.

PayPal did not return a request for comment.

“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,” Harmeet K. Dhillon, assistant attorney general for civil rights at the Justice Department, said in a statement. “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.”

During his term, President Joe Biden issued numerous executive orders to implement DEI initiatives throughout all agencies of the federal government, as well as the military.

President Donald Trump has made dismantling the Biden-era DEI agenda a priority since the start of his second term. In January 2025, Trump signed the executive order “Ending Radical and Wasteful Government DEI Programs and Preferencing,” which canceled Biden’s diversity mandates across the federal government.

In March, Trump signed an executive order barring federal contractors and subcontractors from engaging in DEI practices and directed the Office of Management and Budget to report sectors still engaging in the practices.

The May 12 settlement was not the first time that PayPal has attracted federal attention over alleged discrimination.

In 2023, the Securities and Exchange Commission sided with conservative investors in their request to investigate what they said was PayPal’s systemic political and religious discrimination against customers.

In that case, PayPal sought to block a vote from going to its shareholders regarding whether the company engaged in discriminatory practices.