The Office of Fair Trading (OFT) is investigating six chains after discovering many retailers in the sector were misleading customers into thinking they were getting a bargain by artificially inflating the original price.
It found "systematic" examples of artificially inflated reference pricing within the industry, through the use of "was" prices formerly charged by the retailer, "after sale" prices that the trader intended to charge in the future, or recommended retail prices (RRPs) set by the manufacturer.
During monitoring of the six companies, the overall average of sales of items at the reference price was just 5%.
OFT director Gaucho Rasmussen said: "This bank holiday sale season we would recommend that consumers ask sales staff when and for how long the reference price was used and also how many sales they achieved at this price."
The OFT said there were a significant number of products sold by some retailers where no sales at all took place at the artificially inflated price.
In all cases, no explanation of how and when these higher prices were established were provided.
The consumer watchdog has written to the six retailers asking them to stop using the pricing practices that mislead consumers, giving them until autumn to respond.
The OFT did not name the companies in the hope of reaching a quick resolution, however Carpetright has since confirmed it has been contacted as part of the investigation.
It said: "Carpetright strives to operate fully within all laws and regulations at all times. Carpetright is co-operating fully with the OFT and will respond to the letter in due course."
"There is no suggestion in the letter of Carpetright having behaved in a manner which breaches competition law."
Approached by Sky News, retailer DFS declined to comment.
Furniture Village said: 'We are aware of ... the ongoing investigations being undertaken, and it would be inappropriate for us to comment until such time as its findings are published.
"Furniture Village is fully supportive of any initiative which ensures that, industry-wide, future pricing policies and practices are fair and accurate."
Mr Rasmussen said: "OFT research has found that reference pricing can mislead consumers into thinking the item they have bought is of higher value and quality.
"(With) pressure them to buy there and then so they don't 'miss out' on the deal and also impair their judgment, as buying an item immediately means they do not get the chance to search the market for the real best deals.
"This will help them to determine whether they are getting a good deal."
Richard Lloyd, executive director of Which?, the consumer campaigning charity, added: "The OFT's warning sends a clear message to carpet and furniture stores that special offers really have to be special.
"It's unacceptable that shoppers are misled into thinking they're getting a good deal when that might not be the case."
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