Consumer group Choice says an investigation into cosmetics companies has revealed a large number are misleading customers about their animal testing policies.
It has found certain companies are allowing their products to be tested on animals because it is compulsory if they are to gain access to the lucrative Chinese market.
Choice spokeswoman Zoya Sheftalovich says that is despite telling Australian customers they are animal cruelty free.
"They're the big brands that a lot of women are using and a lot of women think are cruelty free or not tested on animals, when in fact that's not strictly accurate," she said.
"There are quite a large number of Australian consumers who care about whether a product is tested on animals or whether it's cruelty free.
"I think those consumers are the ones who are seeking out those brands.
"And the trouble is, those consumers currently when they go to stores, when they're walking down the halls of Myer or David Jones and they go up to the sales assistants who they place a fair amount of faith in...
when they ask these people if these products are tested on animals...
they do expect to be told that those products are not tested on animals anywhere around the world.
"We don't think consumers make a distinction between animal testing in one country and animal testing in another country.
"We think that consumers care about animal testing as a whole." The ABC contacted companies including Bobbi Brown, Shiseido and Dior, but did not receive a response.
L'Oreal says it is committed to "advancing the cause of alternative methods to testing".
A spokesman for the Australian cosmetics industry body, Accord, says the Chinese market is a complex issue and requirements for product approval can be confusing.
Advocacy group People for the Ethical Treatment of Animals (PETA) says China is developing a non-animal test for cosmetics.
Australian campaigner Claire Fryer says companies should not enter the Chinese market until the alternative test is being used.
"Companies such as Paul Mitchell Systems, Urbay Decay, Dermalogica, The Body Shop, these companies have shown it is important to them to remain cruelty free and all companies should be following suit," she said.
"PETA US have within a year funded scientists who have been working with the Chinese government and they're now looking at accepting the very first ever non-animal test for cosmetic ingredients.
"So it can be done, and this is obviously a huge step for animals within this market, many, many animals will be spared the pain and suffering of these tests thanks to this non-animal test which will be coming in soon." The Body Shop says it operates independently of its parent company L'Oreal and it continues to pride itself on its stance against animal testing.
Body Shop chief Mark Kindness says it has chosen not to export to China.
"Until China changes its stance on animal testing, we are prepared to not enter that market," he said.
Mr Kindness says there are plenty of other emerging markets, such as Brazil, that do not test on animals.
"While it's tempting in terms of the size, until the day comes that you do not need to test your ingredients or your products on animals, we will not be going into that market at all," he said.
In March, the European Union enforced a complete ban on the sale of cosmetics developed through animal testing.