The Australian Competition and Consumer Commission has launched federal court action against online e-cigarette sellers Social-Lites and Elusion New Zealand Limited over statements allegedly made on their websites claiming their vaporisers were free of carcinogens and toxins found in tobacco cigarettes.

A screen grab from the Social-Lites homepage taken in February shows the retailer claimed its products "come without all the harmful carcinogens and toxic substances in conventional smokes".

A 15-second video posted to the Social-Lites website included text that read "No Carcinogens, No Smoke & No Tar". Both have since been removed.

But chemicals including formaldehyde, acetaldehyde and acrolein were found in e-cigarettes products made and sold both suppliers when they were used as directed,  independent testing commissioned by the ACCC showed.

Formaldehyde, a colourless gas commonly used to embalm dead bodies, is classified as being carcinogenic to humans by the United Nations. Small amounts of the substance do not present a health risk, but high exposure levels can cause adverse effects including sensory irritation and breathing difficulties, the Cancer Council NSW and ACCC say.

Acetaldehyde and acrolein are also considered carcinogens.

The $3 billion and growing market of e-cigarettes internationally was being driven by advertising claiming they offer users the taste of tobacco cigarettes without all the "nasty ingredients", said ACCC Rod Sims.

"People may think they're doing something very healthy by using them as an alternative to conventional cigarettes when in fact they may not be," Mr Sims said.

"It's a profound thing to claim that your products have all the benefits of conventional cigarettes without the cancer causing chemicals, and we are alleging they have no basis to say this.

"Our testing shows there are carcinogens in these products," he said, adding the ACCC was the first organisation worldwide to launch this type of action against an e-cigarette supplier.

"If they have research showing their e-cigarettes have no toxins in them we haven't seen in and they should put that evidence forward in court," he said.

Manager of Social-Lites Lee O'Hare told Fairfax Media it was the ACCC which had made "very misleading" claims regarding to toxicity of its e-cigarettes.

"As with all Electronic Cigarettes or Vaporisers they will produce these chemical if vaporised at unrealistic temperatures," Mr O'Hare said.

"It's only when people use vaporisers with high voltage capabilities do carcinogens form. Obviously No Smoke or Tar is produced as there is no burning of Tobacco unlike conventional tobacco cigarettes," Mr O'Hare said.

Emeritus Professor Simon Chapman said e-cigarettes were designed to be adjusted by users wanting a tailor made experience, with endless threads no vaping chatrooms discussing how best to do so.

"It's real cowboy territory," the public health expert at the University of Sydney said.

E-cigarette suppliers operated in a "wild west" scenario with no regulatory oversight that allowed them to make the unproven claims, Professor Chapman said.

"It's has been something many of us have been noticing globally; claims which are usually implicit but sometimes explicit about their lack of toxins. It was only a matter of time before someone held them to account.

"It would be like someone putting a pharmaceutical product on the market without any regulatory oversight, saying 'here is our new drug but we're not going to tell you anything about what's in it or conform to any standards, just take our word for it'," he said.

"There is no guarantee at all that one batch contains the same concentrations as another, let alone the same ingredients. It can vary enormously."

Elusion has been contacted for comment.