(José Niño, Headline USA) PayPal agreed to forgo roughly $30 million in transaction fees to settle a Justice Department probe into allegations that the financial services company adopted unlawful preferences for minority owned businesses, the Wall Street Journal reported.
Justice Department officials had been investigating whether PayPal violated a federal civil rights law that prohibits creditors from discriminating against applicants based on race. The probe targeted PayPal’s $530 million plan to support Black and minority owned businesses, which the company created in 2020 shortly after the killing of George Floyd by a police officer prompted a nationwide conversation about racial inequality.
The settlement requires PayPal to waive processing fees for $1 billion of transactions for small businesses owned by veterans, as well as businesses involved in farming, manufacturing, or technology. Justice Department officials said the fee waivers are worth approximately $30 million.
PayPal did not admit wrongdoing as part of the settlement. The company said in a statement it was excited “to infuse American small businesses with even more economic opportunity.”
As the Wall Street Journal reported, the settlement fits into a broader Trump administration push to root out diversity initiatives in American corporations.
“American corporations are on notice: you will face our aggressive enforcement if you use race or national origin to discriminate against qualified Americans,” acting Attorney General Todd Blanche said.
The Justice Department is conducting multiple civil probes under the umbrella of the False Claims Act. The department has embraced the argument that holding a federal contract while still considering diversity when hiring constitutes fraud against the government, entitling officials to recoup potentially millions of dollars.
That theory produced a settlement with IBM last month. The company agreed to pay the federal government more than $17 million to resolve allegations that it failed to comply with anti-discrimination requirements in contracting by considering diversity in employment decisions.
PayPal also faces private litigation over its funding program for minority startups. An Asian American venture capital investor sued PayPal in January 2025, accusing the company of illegal discrimination by earmarking investments for Black and Latino owned operations.
José Niño is the deputy editor of Headline USA. Follow him at x.com/JoseAlNino
