The lawsuit against American pharmaceutical manufacturer Johnson & Johnson claims the ingredient, marketed as a nasal decongestant, is actually ineffective when taken orally.
Growing evidence has seen Food and Drugs Administration (FDA) in the US propose an outright ban because it believes the drugs when taken orally don't work.
The ingredient had been marketed as a substitute for pseudoephedrine when it was banned for sale between 2011 and 2024 over concerns it was being used in the manufacture of illicit drugs.
Law firm JGA Saddler is urging the potentially millions of New Zealanders who have purchased affected products to register their claim.
Director Rebecca Jancauskas said it could be one of the biggest class actions in New Zealand history.
"Customers should be able to confidently buy medicines that work as advertised and when they don't, the company involved should be held accountable," she said.
"Johnson & Johnson has manufactured and marketed a medication that decades of evidence have shown doesn't work as claimed, relying on outdated, fallible studies to sell the New Zealand public products that don't do what they say on the packet.
"New Zealanders have trusted these products to work as advertised and wouldn't have bought them if they knew they were ineffective at treating congestion.
"Johnson & Johnson has misled the public and they need to be held accountable for their actions. We are asking all New Zealanders who have purchased any of the 17 affected products to register to be a part of the class action."
The legal company has launched a similar class action in Australia.
RNZ has approached Johnson & Johnson for comment.
The products named in the suit are:
Sudafed PE Nasal Decongestant Tablet
Sudafed PE Sinus + Pain Relief Day & Night Tablet
Sudafed PE Sinus + Pain Relief Tablet
Sudafed PE Sinus + Allergy & Pain Relief
Sudafed PE Sinus + Anti-inflammatory Pain Relief Tablet
Codral Cold & Flu + Mucus Cough Capsule
Codral Decongestant Tablet
Codral Day & Night Tablet
Codral Cold & Flu Tablet
Codral Night Tablet
Codral Mucus Cough + Cold Liquid
Codral Cold & Flu + Mucus Cough Powder
Codral Cold & Flu Powder
Benadryl PE Chesty Cough & Nasal Congestion Syrup
Codral Cold & Flu Sore Throat Tablet
Day & Night Cold & Flu + Cough Combination Tablet
Benadryl Mucus Relief Plus Decongestant Liquid
