Young viewers routinely are exposed to graphic violence, explicit sex, profanity and other adult content in shows that are labeled as suitable for children, said Tim Winter, the group's president.
That's because of inherent flaws in the ratings system, he said, including the oversight board's structure and the fact that networks rate their own programs.
The 24-member TV Parental Guidelines Monitoring Board is made up largely of representatives from the broadcast networks and cable channels whose programs are subject to the ratings.
"No other oversight board is comprised of executives of the very industry it's supposed to watchdog," Winter said.
That leaves parents without reliable information to make choices and corporate advertisers supporting shows that may appear more family friendly than they are, he said.
The Federal Communications Commission declined comment. It authorized the ratings system and monitoring board in 1996.
In a statement, board spokeswoman Missi Tessier called the ratings a valuable resource that help parents make responsible viewing decisions based on what is appropriate for their own families.
She cited a 2014 survey of about 1,000 parents that found 72 percent use the TV ratings system and 84 percent find it helpful.
"We don't anticipate an eager response from the industry," Winter said. "We are gearing up for some public outreach to the FCC and Capitol Hill (lawmakers) if there is no immediate" move toward change.
The new study focused on broadcast networks but the system's flaws extend to cable TV, which uses the same ratings, he said.
Increasing consumer use of online viewing services such as Netflix and Hulu makes a universal and trustworthy system crucial, the report said.
The ratings system was adopted in conjunction with the so-called V-chip, which is required in all TV sets built since 2000 and allows parents to block programming they deem objectionable by rating.
The outcome is a lack of broadcast shows rated TV-MA, for mature audiences, which major corporate sponsors would tend to shun, Winter said.
Instead, shows labeled TV-PG (with material that parents may find unsuitable for younger children) and TV-14 (material possibly unsuitable for children under 14) have multiplied, the study found.
But those TV-PG and TV-14 shows do not live up to their billing and sometimes include bloody scenes of violence, sex and other questionable content, Winter said.
He cited "The Real O'Neals," a new ABC family comedy, for an episode that used a string of profanities but which was labeled PG. ABC declined comment.
The study found that programs labeled TV-G and appropriate for all viewers have essentially been eliminated from prime-time TV, graphic content is increasing in amount and intensity and yet all broadcast TV content is rated as suitable for a 14-year-old.
Winter said the council is calling for a system that is accurate, consistent, transparent and accountable to the public.
"Right, now, it is none of those four things," he said.