PayPal accused of racial bias against Asian Americans in funding program

By Jonathan Stempel

NEW YORK (Reuters) – PayPal has been sued by an Asian American businesswoman who accused the digital payments company of racial bias for restricting part of a $535 million investment program to Black and Hispanic applicants, costing her millions of dollars.

Thursday’s complaint by Nisha Desai and her New York-based venture capital firm Andav Capital is part of a growing push among some conservatives to curtail diversity, equity and inclusion initiatives in corporate America.

Born to and raised by immigrant parents in the Deep South, Desai thought herself a good fit for PayPal’s investment program, which the San Jose, California-based company announced in June 2020 to support Black and minority-owned businesses and help address economic inequality.

Desai said she spent 1-1/2 months seeking funding before PayPal stopped communicating, even as the company invested $100 million in 19 venture capital firms led by Blacks and Hispanics.

She said PayPal has told multiple other businesswomen they were ineligible for funding because of their Asian descent.

“To PayPal and its executives, Asian Americans might be minorities, but they’re the wrong kind of minority,” according to the complaint in Manhattan federal court.

PayPal declined to comment, saying it does not discuss pending litigation.

Desai accused PayPal of violating Section 1981 of the Civil Rights Act of 1866, which bars racial bias in contracting; Title VI of the Civil Rights Act of 1964, which bars federal funds recipients from allowing racial discrimination, and New York state and city human rights laws.

She is seeking unspecified damages and to ban PayPal from considering race and ethnicity in its investment program.

Desai sued after the federal appeals court in Manhattan said last March that the advocacy group Do No Harm lacked standing to pursue a similar case against drugmaker Pfizer (NYSE:) over a fellowship program for Blacks, Hispanics and Native Americans, because it did not identify a member who was harmed.

Desai is represented by Consovoy McCarthy, which represented Do No Harm and often advocates for conservative causes. The law firm did not immediately respond to requests for comment.

The case is Andav Capital et al v PayPal Holdings Inc (NASDAQ:) et al, U.S. District Court, Southern District of New York, No. 25-00033.