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The Trade Descriptions Act - which comes into force today - makes it a crime for a trader to knowingly sell an item with a misleading label or description.
Weights and measures inspectors who are policing the new guidelines have the power to issue fines to shops and other traders found to be breaking the law.
In cases of repeat offending or a more serious offence, the retailer could face imprisonment.
The alarm has already been raised by the Gramophone Record Retailers Association, which says many long-playing records, or LPs, have been labelled misleadingly as "stereo" when they are not, in fact, genuine stereophonic recordings.
Angus McKenzie, technical officer of the association, has warned retailers they may face prosecution under the new act.
Many of the larger department stores say the new law will not make any difference as they already insist on accurate labelling.
But in one London department store, Selfridges, salesmen have been given a briefing on how to mark up price reductions for the forthcoming January sales.
Only products which have been on sale in store for 28 days in the preceding six months at a higher price can be marked as genuine reductions.
The Trade Descriptions Act replaces the Merchandise Marks Act which has been in place since the mid-19th century dealing specifically with the regulation of trade marks.
Weights and measures spokesman Leslie Griffiths said: "From the point of view of the traders, I hope they won't envisage a reign of terror. We shall act as much as we possibly can in an advisory capacity.
"Of course any case of deliberate fraud or gross carelessness will be put before local authorities and they may recommend legal proceedings, but by and large we shall endeavour to administer this act by advice and persuasion."
Some retailers have expressed concerns about the damage the act will do to trade.
There has also been some criticism of the act for failing to provide adequate protection for the consumer who purchases faulty goods by way of compensation.
Early complaints brought under the Trade Descriptions Act included an "undetectable" toupe which was detectable, a pair of women's washable bell-bottom trousers, which proved to be unwashable and a 9d cup of tea which cost 1s 3d.
After its first six months of operation, the Board of Trade said it intended to bring prosecutions in 435 cases, involving misdescriptions of petrol, clothing, food, car milometers, MoT test certificates and wines.
But retailers continued to express concerns. The Motor Agents' Association warned the possibility of prosecution under the Trade Descriptions Act would paralyse car trading.
After taking legal advice, it issued a warning in February 1969 that motor traders could face prosecution for selling a car with an inaccurate milometer reading. This, in fact, has turned out to be the most common complaint under the act.
Today, a retailer could face a fine of up to £5,000 for a first offence and an unlimited fine or two year jail term for a more serious offence.
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