DVDs and videos are being sold illegally without the correct rating stickers, the Office of Film and Literature Classification says.
Chief censor Bill Hastings said the illegal activity compromised the credibility of the rating system.
"It might seem like a picky kind of thing, but if the public can't relyon the labels, there is no point in my even being here," he said.
By law, anyone who wants to sell a video or DVD that may have offensive content must pay to get the film classified by the Office of Film and Literature Classification.
The office then gives the official film-labelling body permission to provide the distributor with the appropriate green, yellow or red labels, which tell the public the rating of the film.
Ratings range from G for general viewing up to R18 for adults-only movies.
Mr Hastings said many people did not realise that placing a sticker on a video or DVD which had not been obtained from the labelling office for that particular film was illegal. He had visited shops that were selling movies carrying labels that did not reflect the content of the films.
And the Department of Internal Affairs had prosecuted some distributors and manufacturers over the same problem.
Some distributors had spare labels they stuck on movies that had not been classified.
Philip Watkins, a former video distributor who runs the Balmoral Videon video store, said he knew of video shops selling movies with no classification labels at all.
He also had seen movie theatres with poster advertisements for films that did not have ratings on them. Those also were illegal, he said.
The stickers from the labelling body were cheap, about $1.50 for two.
But the costs of classifying a movie ranged from $1000 to $2000 and it was also time-consuming.
"As soon as it is restricted you pay that money," Mr Watkins said.
"They [distributors] are probably avoiding the fee and the time it takes to get approval."
