PayPal is facing a lawsuit from Nisha Desai, the founder of venture firm Andav Capital, who alleges that she was excluded from the payment giant's diversity and equity program because of her Asian ethnicity. The lawsuit, filed in a New York federal court, claims that PayPal's program, which committed $530 million to support Black and minority-led businesses, discriminated against Desai and her firm.

In 2020, PayPal launched the program in response to the Black Lives Matter movement, aiming to support underrepresented groups in the tech industry. However, Desai claims that she was repeatedly told by PayPal executives that the program was only open to Black and Hispanic-led firms, excluding Asian Americans like herself. According to the lawsuit, Desai met with PayPal executives multiple times, only to be informed that her firm did not meet the program's racial criteria.

Desai's lawsuit alleges that PayPal's program violated the Civil Rights Act of 1981 and New York State and city laws that prohibit racial discrimination. The suit claims that PayPal's "racially exclusionary investment program" is illegal and that the company's actions have caused her firm to miss out on vital capital worth millions of dollars. Furthermore, the lawsuit argues that the program's racial bias has led to an adverse perception of Desai's firm, damaging its reputation and access to resources.

The lawsuit is not an isolated incident, as similar cases have been filed against other companies and organizations that have implemented diversity programs targeting specific racial groups. For example, Edward Blum, the man who helped overturn affirmative action in education, has launched the American Alliance for Equal Rights (AAER), which has sued several organizations, including the venture firm Fearless Fund, over allegations of racial discrimination.

Desai's legal representatives, Consovoy McCarthy, have a history of taking on cases related to race-based programs. The law firm has previously sued Pfizer over its diversity program, which targeted Black, Latino, and Native Americans, and has also sued Harvard University and the University of North Carolina over race-based admissions.

The lawsuit raises important questions about racial equity in tech investments and the potential unintended consequences of diversity programs. While these initiatives aim to address historical disparities, they may inadvertently create new forms of exclusion. As the tech industry continues to grapple with issues of diversity and inclusion, this lawsuit serves as a reminder of the need for nuanced and inclusive approaches to promoting equity.

PayPal has declined to comment on the case, citing pending litigation. The outcome of this lawsuit will be closely watched, as it may have significant implications for the tech industry's approach to diversity and inclusion initiatives.