The report, released Wednesday by the Department of Health and Human Services' inspector general, found that 20 percent of the 127 weight loss and immune-boosting supplements investigators purchased online and in retail stores across the country carried labels that made illegal claims to cure or treat disease.
In addition, many of those and other supplements lacked the scientific studies recommended to support their suggested uses.
Some products went so far as to state that the supplements could cure or prevent diabetes or cancer, or that they could help people with HIV or AIDS, which is strictly prohibited under federal law.
Consumers may not just be wasting their money on pills or tablets, but they could be endangering their health if they take a supplement in place of a drug thinking it will have the same effect, the report concluded.
"Consumers rely on a supplement's claims to determine whether the product will provide a desired effect, such as weight loss or immune support," the report said. "Supplements that make disease claims could mislead consumers into using them as replacements for prescription drugs or other treatments for medical conditions, with potentially dangerous results."
The market for dietary supplements - which can include anything from vitamin C tablets to capsules of echinacea - is a huge one with hundreds of products. The inspector general's investigation focused on one segment that officials said is booming.
Federal law doesn't require supplements to go through rigorous testing to prove they are safe or even that they work. The Food and Drug Administration can act only after consumers get sick or a safety issue comes to light.
The Office of Inspector General found that in numerous cases, when companies did submit evidence to back up their health claims, it fell far short of government recommendations.
One company submitted a 30-year-old handwritten college term paper to substantiate its claim, while others included news releases, advertisements and links to Wikipedia or an online dictionary, according to the report.
Overall, the review raises questions about whether the system is allowing companies to mislead consumers, investigators said, and recommended that FDA ramp up its oversight. The report did not name individual brands or products, and also did not estimate the total number of dietary supplements on the market.
In response, the FDA said in written comments it would consider asking Congress for more oversight powers to review supplement companies' evidence proving their products' purported health benefits. The agency agreed that it should expand surveillance of the market to detect spurious claims that supplements can cure or treat specific diseases.
The FDA recognizes the importance of the concerns raised about industry compliance and will address the recommendations as its resources and priorities allow, FDA spokeswoman Tamara Ward said in a statement Wednesday.
Investigators also found that 7 percent of the weight loss and immune support supplements they surveyed lacked the required disclaimer stating that FDA had not reviewed whether the statement on the label was truthful.
Executives from the supplement industry said the report highlighted a handful of bad actors.
"This small sample of supplements shouldn't smear the entire industry," John Shaw, executive director of the Natural Products Association, said in a statement. "Nevertheless, this report puts supplement makers on further notice about their responsibilities under the law."
Ashish Talati, a Chicago-based attorney whose firm represents about 350 dietary supplement and food companies from across the globe, said the industry is well regulated and it made sense for manufacturers to share the scientific evidence behind their claims with the FDA.
"Supplements are very, very safe compared to other products," he said. "Yes, there are companies that cross the line and make specific claims, but that is the enforcement area that FDA focuses on where there is a public health issue."