Its products are in more than 1,000 buildings across Japan, including high-rise buildings and hospitals.
The Japanese Government says buildings using the defective products are not at risk of collapsing in strong earthquakes — just that they could sway more than expected.
Professor Hiroshi Kawase from the University of Kyoto's Disaster Prevention Research Institute told the ABC that the dampers only activated after a building had absorbed the peak impact of a quake.
He said they were a secondary countermeasure to reduce the sway after a quake hit buildings.
"A damper cannot reduce the peak amount of the building vibration — but it reduces the duration of shaking," he said.
"Without a damper, the building shakes for a long time — especially for high-rise building, it can last minutes. But if we have a damper then the shaking will reduce to maybe a third of the duration."
Tokyo-based KYB and its subsidiary, Kayaba System Machinery, manufactured and sold the defective dampers from March of 2000 through to September of this year.
The products did not meet the standards set by the government.
The Japanese Ministry of Land, Infrastructure, Transport and Tourism said the company falsified the pre-sale test results of their dampers and ordered them to be replaced immediately.
KYB's President Yasusuke Nakajima said he was "very sorry" for the scandal.
"Our company's basic policy is to immediately replace the nonconforming products and continue the investigation into products where it is unclear if they have been altered or not."
It's understood at least eight inspectors were found to have been involved in altering the data.
KYB has been informing affected building owners over the last few days, and subject to their approval, will name them today.
The operator of Tokyo's famous Skytree said it uses a KYB system for absorption and control and is investigating whether more devices made by the company are used at the tower.
A hospital in Miyagi Prefecture was found to contain the faulty dampers — visitors said they were concerned.
KYB products are also in the Olympic Aquatics Centre and other Tokyo 2020 venues.
A spokesperson for the Tokyo 2020 Games told the ABC it was aware of the issue and that it was awaiting the results of an investigation.
Professor Kawase said people living in buildings with the defective products should not be overly concerned, as the difference between a product that performed to 80 per cent of the required standard and one that passed would be unlikely to be felt by residents.
In 2015, a similar data fabrication scandal involving Toyo Tire & Rubber Co affected 154 buildings that had installed the company's earthquake shock absorbers.