Most Australians screened for breast or prostate cancer are not informed of the risks of being diagnosed with a disease that may never cause them harm.
A new survey also found that 90 per cent of people generally have not been told by their doctors about the risk of over-diagnosis.
"Over-diagnosis occurs when someone is diagnosed with a disease that would not have harmed them, often as a result of undergoing screening," said Bond University researcher Ray Moynihan.
This can lead to them being labelled unnecessarily and then undergoing unnecessary and invasive treatments.
The study, published in the scientific journal PLOS ONE, noted UK estimates that one in five cancers detected by breast screening would never go on to harm the woman.
And US estimates found as many as one in two prostate cancers detected by screening may never harm the patient.
The Australian survey found more than 80 per cent of those screened for prostate cancer and almost 90 per cent of those screened for breast cancer said they were not told about the risk of over-diagnosis.
Overall, only one in 10 people had ever been told about over-diagnosis, said Dr Moynihan, the study's lead author.
The survey also found that 78 per cent of people thought doctors with financial ties to drug companies should not be members of panels that define disease.
Dr Moynihan said over-diagnosis was linked to the relationship between doctors and pharmaceutical companies.
"Disease definitions are often widened to include people with mild problems or at very low risk of illness, therefore turning previously healthy people into patients," he said.
"The survey results add weight to recommendations that influential medical panels should be free of financial conflicts of interest."