The dichotic frequency following responses (FFR) have been used in studies to infer about dichotic auditory processing. In the present study, we hypothesize that the proximity of the binaural neural generators of the FFR would result in interference of the volume-conducted electrical fields. This might lead to contamination of the scalp-recorded dichotic FFRs due to which it might be difficult to infer about true dichotic processing in the putative neural generators. We investigated this by recording FFRs to binaurally presented 200 Hz pure tone with graded dichotic phase offsets (0°, 90°, 180° and 270°) in normal hearing young adults. Spectral analysis of the FFRs was performed for the estimation of the magnitude and phase at the component frequencies. FFR spectra were compared using non-parametric paired randomizations within the subjects. We found that the brainstem responses to a 200 Hz pure tone consisted of prominent peaks at 200 Hz, and at frequencies corresponding to the harmonics of 200 Hz. The FFR spectral magnitude at 200 Hz diminished with a phase offset of 180°. Phase offsets of 90° and 270° showed reduced spectral magnitudes at 200 Hz than those in the 0° condition. Our findings, in line with the hypothesis, show that the dichotic FFRs do not reflect true dichotic processing and that they are contaminated during volume conduction. Additionally, we found harmonic distortion products (HDP) in the FFRs. We found that the response at 200 Hz and the 3rd HDP systematically varied with a change in phase of the stimulus, while the even HDPs (2nd and 4th) were phase-invariant. Based on our findings, and modeling FFRs using auditory models, we propose a rectification process as the contributors for the generation of HDPs. We also discuss the implications of this HDP generating mechanism in understanding the pitch represented in FFRs.