Rat fur is reportedly being used to make expensive scarves or jumpers advertised as 100 per cent cashmere.
Cheap materials - including at least one case of rat fur - are being woven into garments, claim campaigners including former TV presenter Selina Scott.
Supporters of cashmere goat farmers in China and Mongolia say their industry is being undermined by factories practising fraud and mislabelling.
Scott, who is about to launch her own ethical cashmere collection, believes the problem is widespread.
She told the Sunday Times: "It's an absolute scam. It is a well-recognised fact in the industry that parts of the cashmere trade have been corrupted."
She said the cheap trade undermined the livelihoods of goat herders in Mongolia, because of a fall in demand for high-quality cashmere.
Global cashmere production is about 7.5million kilograms, however sales of products carrying the name are much higher.
Malcolm Campbell, managing director of the Cloth of Kings in Fife, has worked for more than four decades in the textile industry.
He said: "There are not enough cashmere goats in the world to produce the amount of cashmere that is on sale."
According to Mr Campbell, the "basic cheaters" will use acrylic or polyester mixed with the cashmere. Others will contain modified sheep or yak wool. In some cases even rat fur has been found.
It was reported two years ago that 1m items of cashmere clothing seized from Chinese-run firms in Rome were found to be a mixture of acrylic, viscose and fur from rats and other animals.
Karl Spilhaus, president of the Cashmere and Camel Hair Manufacturers Institute (CCMI), which represents cashmere producers and conducts worldwide said that mislabelling was a problem on British high streets.
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