Justice Department Secures $30 Million Settlement With PayPal Over Discriminatory DEI Program
The Justice Department reached a settlement with PayPal that requires the company to end an investment program open only to black and minority-owned businesses. The company will instead direct $30 million in waived processing fees to a new race-neutral initiative serving veteran-owned businesses and those in farming, manufacturing and technology.
newser.comThe Justice Department announced a $30 million settlement with PayPal Inc. on May 12, 2026 to resolve a fair lending investigation into a program that restricted eligibility to black and minority-owned businesses.
The settlement affects PayPal's Small Business Initiative, which previously limited participation on the basis of race and national origin. Under the agreement, PayPal will launch a revised initiative open to all American small businesses without regard to race, national origin or other protected characteristics.
The company will waive processing fees on $1 billion in transactions for eligible veteran-owned businesses and those engaged in farming, manufacturing or technology. That waiver carries an approximate value of $30 million.
The prior program is now closed. The new Small Business Initiative takes effect immediately under the terms of the settlement, which the Justice Department filed in conjunction with the announcement.
The change requires PayPal to redirect its fee-waiver resources to a broader pool of small businesses. Veteran-owned firms and companies in the designated sectors now gain access to the waived fees. The settlement triggers compliance monitoring by the Justice Department's Civil Rights Division, which will track implementation of the revised initiative.
Other financial institutions operating similar targeted programs face potential follow-on reviews under the same fair lending standards applied to PayPal. The $30 million in foregone revenue will shift from one set of businesses to another without increasing the company's overall outlay.
This settlement is the latest Justice Department action against corporate programs that allocate benefits on the basis of race. The department has pursued parallel investigations into lending and investment practices at other large firms following the Supreme Court's 2023 ruling against race-based college admissions.
The PayPal agreement cites no admission of liability and resolves the inquiry without litigation.
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