NEW YORK, Jan 3 (Reuters) - PayPal ( PYPL ) 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 ( PYPL ) 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 ( PYPL ) stopped communicating, even as the company invested $100

million in 19 venture capital firms led by Blacks and Hispanics.

She said PayPal ( PYPL ) has told multiple other businesswomen they

were ineligible for funding because of their Asian descent.

"To PayPal ( PYPL ) 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 ( PYPL ) declined to comment, saying it does not discuss

pending litigation.

Desai accused PayPal ( PYPL ) 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 ( PYPL ) 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 ( PFE ) 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 ( PYPL ) et al,

U.S. District Court, Southern District of New York, No.

25-00033.