President Donald Trump’s Department of Justice announced Tuesday that PayPal agreed to a $30 million settlement over what the administration described as an “unlawful DEI” initiative that allegedly discriminated on the basis of race.
“Today, the Justice Department announced a settlement with PayPal Inc. to resolve a fair lending investigation into a discriminatory investment program created for black and minority-owned businesses,” Trump’s DOJ said in a press release.
According to the Department of Justice, the settlement requires PayPal to establish a new Small Business Initiative that does not use race, national origin, or other protected characteristics as eligibility criteria. Under the agreement, PayPal will waive processing fees for up to $1 billion in transactions — an estimated value of roughly $30 million — for qualifying American small businesses that are veteran-owned or operate in the farming, manufacturing, or technology sectors.
The agreement also requires PayPal to appoint a director to oversee the initiative, conduct assessments on the needs of small businesses, submit plans and proposals to the federal government, train employees on compliance with the Equal Credit Opportunity Act, and provide annual reports on the program.
The DOJ investigation stemmed from a PayPal fund launched in 2020 that was designed to invest in “black and minority-owned businesses.” Federal officials said the initiative effectively gave preferential treatment to businesses based on race, color, and national origin, which they argued violated federal anti-discrimination laws.
In a statement announcing the settlement, Acting U.S. Attorney General Todd Blanche said the administration was following through on President Trump’s pledge to eliminate what it considers unlawful DEI practices across corporate America.
“American corporations are on notice,” he warned. “You will face our aggressive enforcement if you use race or national origin to discriminate against qualified Americans.”
Assistant Attorney General Harmeet Dhillon similarly warned that companies engaging in race-based discrimination could face significant legal consequences.
“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,” she said. “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 PayPal settlement comes as the Trump administration ramps up scrutiny of diversity, equity, and inclusion programs throughout both the public and private sectors. The administration has argued that many DEI initiatives violate civil rights laws by favoring certain racial groups over others.
The Trump administration also recently filed a lawsuit against The New York Times over allegations that the newspaper engaged in discriminatory hiring and promotion practices tied to DEI policies. Federal officials alleged that a white male employee with extensive experience in real estate journalism was excluded from promotion opportunities because of his race.
The administration has increasingly framed such cases as part of a broader effort to restore what it calls merit-based hiring and lending standards, while critics argue the crackdown could undermine programs intended to expand opportunities for historically disadvantaged groups.
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