Macy's is to pay $650,000 (£390,000) to settle claims it racially profiled and detained ethnic minority shoppers at its flagship Manhattan shop.
Under a deal with New York's attorney-general Macy's agreed to a series of changes at its 42 stores across the state.
Staff at Macy's, one of US retailing's big names, were said to have targeted shoppers because of their colour.
US actor Rob Brown was among customers suspected of theft or fraud.
Some complaints against Macy's were from customers who, despite not concealing goods, were detained after moving between floors at the Manhattan store.
Other customers who spoke poor English, and were suspected of shoplifting or credit card fraud, were not allowed to make phone calls or have an interpreter, and were required to sign documents that they could not understand.
End Quote Eric Schneiderman New York attorney-generalIt is absolutely unacceptable — and it's illegal — for anyone in New York to be treated like a criminal simply because of the colour of their skin"
Last month, Mr Brown, who appeared in the HBO drama Treme, settled with Macy's and the New York Police Department over claims he was accused of credit card fraud because he was black.
After buying a $1,300 watch for his mother at the Herald Square store last year, he was detained by three white police officers and taken to a cell.
He told CNN: "They cuff me, parade me around the store, all the while maintaining, 'we do this all the time; it's a fake card; you're going to go to jail'."
Eric Schneiderman, the state's attorney-general, said: "It is absolutely unacceptable — and it's illegal — for anyone in New York to be treated like a criminal simply because of the colour of their skin."
Employees at Macy's detained 1,947 people at the Manhattan store, while a further 6,000 people were held at other stores in New York state, the investigation found.
As part of the settlement, the retailer will adopt new policies against profiling including training employees, give police access to its security cameras, investigate customer complaints, and keep better records of detentions.
Macy's said that any occurrence of such behaviour would not be tolerated.
The attorney-general's civil rights bureau reached a similar agreement with rival retailer Barneys earlier this month.
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