Dixons, which also trades as Currys, has been investigated by more than 22 out of 30 county trading standards offices according to a survey in a Sunday newspaper.
It found that in the previous two years 13 counties had prosecuted the company and five had issued formal cautions. Another 12 were contemplating prosecution.
The Trades Descriptions Act and the Sale of Goods Act both say that goods have to be as described. Therefore for a product to be called "new" there should have been no transfer to anyone else between the shop and the purchaser. "Even if something is bought and then brought back the next day it is still second-hand," said a spokeswoman for the Department of Trade and Industry.
Many used goods, which have been estimated as 1 per cent of the company's stock, have been correctly labelled and discounted but some local trading- standards officers have reported second-hand goods bought as new.
Surrey successfully prosecuted Dixons for selling a video recorder as new when it had been returned as faulty.
The customer discovered the previous owner's TV licence when it fell out of the instruction book.
The company was also fined last month when Kamlesh Trehan from Slough found personal data including private telephone numbers stored on her computer by the previous owner.
A spokesman for the Consumers' Association said: "It should be very clear what consumers are buying and that they are not being misled. People will assume that goods are being sold for the first time unless they are told otherwise." But a spokesman for Dixons said the company had a strict procedure to guard against returned goods being mistaken for new ones.
"Our policy is that second hand goods are clearly marked as such," he said. "We have over 800 stores, 10,000 employees and 20 to 25 million transactions each year.
"We're talking about successful prosecutions in single figures. It's a very small amount and we're constantly reviewing our policy."
Customers have also claimed that they found socks in new tumble driers, pre-programmed numbers of new faxes and other peoples' messages on new answer phones.Reuse content