PayPal is facing a lawsuit alleging racial bias in its $535 million investment program. Asian American businesswoman Nisha Desai and her venture capital firm, Andav Capital, claim the program unfairly excluded Asian Americans.
PayPal launched the initiative in June 2020 to support Black and minority-owned businesses and address economic inequality. The program invested $100 million in 19 venture capital firms led by Black and Hispanic individuals. Desai alleges that after spending six weeks seeking funding, PayPal ceased communication and informed her and other Asian American businesswomen that they were ineligible due to their ethnicity. The lawsuit contends that PayPal discriminated against Asian Americans by deeming them the “wrong kind of minority.”
Filed in Manhattan federal court, the complaint accuses PayPal of violating Section 1981 of the Civil Rights Act of 1866, Title VI of the Civil Rights Act of 1964, and New York state and city human rights laws. Desai seeks unspecified damages and an injunction preventing PayPal from considering race and ethnicity in its investment decisions.
This lawsuit follows a similar case last March where the federal appeals court in Manhattan ruled against the advocacy group Do No Harm, which lacked standing to sue Pfizer over a fellowship program for Black, Hispanic, and Native American individuals. Desai is represented by Consovoy McCarthy, the same firm that represented Do No Harm.
The case, Andav Capital et al v PayPal Holdings Inc et al, is being heard in the U.S. District Court, Southern District of New York, No. 25-00033. PayPal declined to comment on the pending litigation. This case highlights the ongoing debate surrounding diversity, equity, and inclusion initiatives in corporate America. The outcome could significantly impact how companies structure such programs in the future.
