PayPal Sued Over $535M Investment Program Racial Bias

HIGHLIGHTS:

• An Asian American woman sued PayPal for her disqualification from the latter’s $535-million investment program
• The plaintiff, Nisha Desai, said that her ineligibility cost her millions of dollars
• Desai claimed that even today, PayPal continues to make the same race-based claims

Digital payments giant PayPal is facing a lawsuit filed by an Asian American woman for racial bias allegations that cost her venture capital company millions of dollars.

The lawsuit, filed by Nisha Desai and her company Andav Capital, stemmed from PayPal’s $535 million investment program launched in June 2020 seeking to support Black and minority-owned businesses and help address economic inequality.

According to Desai, she spent more than a month seeking funds before PayPal stopped communicating, even as the latter invested $100 million in 19 venture capitals led by Black and Hispanic people.

Ineligibility due to Asian race

She claimed that PayPal executives explicitly thumbed down her and other Asian businesswomen’s eligibility, citing they were ineligible for funding due to their Asian race.

According to Desai, funds majority owned by individuals of other races, including Asian Americans, were not given equal consideration.

“Even today, PayPal continues to make the same race-based claims. In total, PayPal invested $100 million in 19 venture capital firms led by ‘Black and Latinx managers’ but announced not $1 of funding to Asian-American woman-led funds—despite their demonstrated interest and fit,” the lawsuit claimed.

“To PayPal and its executives, Asian Americans might be minorities, but they’re the wrong kind of minority. PayPal has not announced an end to the program,” she added.

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

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

Desai was seeking unspecified damages from the company and have it banned from considering race and ethnicity in its investment program.

According to a report, Desai launched Andav Capital in 2018 to invest in early stage companies. The venture firm has so far made at least 13 investments, including in financial technology startup Acorns, the startup funding marketplace IFundWomen, and the environmental technology firm Kubik.

The suit also alleged that those who received PayPal checks were “able to leverage those awards into additional investments, greater brand equity, resources, access, and success.”

Desai joined other individuals and organizations that are suing diversity schemes for only targeting the Black and Hispanic communities.