NEW YORK, July 5 (Reuters) - A U.S. judge threw out a

central claim in a Federal Trade Commission lawsuit accusing

Walmart ( WMT ) of turning a blind eye to scam artists who used

its money transfer services to fleece consumers out of hundreds

of millions of dollars.

In a decision on Wednesday, U.S. District Judge Manish Shah

in Chicago rejected a claim that Walmart ( WMT ) owes monetary damages

for violating the federal Telemarketing Sales Rule.

The rule prohibits deceptive and unfair acts in

telemarketing, and bans money transfers to pay for goods and

services offered through telemarketing.

Shah said the FTC didn't offer enough specifics on how the

world's largest retailer and its allegedly ill-trained employees

saw or consciously ignored warning signs that fraudsters used

its money transfer services to break the law.

The judge had dismissed the Telemarketing Sales Rule claim

in March 2023, leading the FTC to amend its complaint with new

details. Wednesday's dismissal was with prejudice, meaning the

FTC cannot pursue the claim again.

Shah said the regulator can still seek an injunction to

against violations of an FTC Act provision that prohibits

"unfair methods of competition in commerce."

The FTC declined to comment on Friday.

Walmart ( WMT ), based in Bentonville, Arkansas, welcomed the

decision.

"We've said all along that the FTC's case is a misguided

attempt to expand its enforcement authority, and ruling

validates that view," it said in a statement. "Walmart ( WMT ) will

continue working hard to keep consumers safe from scammers."

Walmart ( WMT ) acts as an agent for money transfers by companies

such as MoneyGram, Ria and Western Union ( WU ). Money

can be hard to trace once delivered.

The FTC said fraudsters used many common schemes, including

impersonating Internal Revenue Service agents, impersonating

family members who needed money from grandparents or other

relatives to avoid jail, and telling victims they won lotteries

or sweepstakes but owed fees to collect their winnings.

The case is Federal Trade Commission v Walmart Inc ( WMT ), U.S.

District Court, Northern District of Illinois, No. 22-03372.