How celebrities like the Kardashians are bending the advertising rules in the social media age

For the 86 million people who follow Kim Kardashian on Instagram, the 36-year-old entrepreneur's life can seem downright exhausting.

Whether she's taking in a show, playing a quick game of tennis in patently unsuitable shades, lounging at her NYC pied a terre, hanging by the pool, or declaring her love for her new fitness gadget, it's hard to know where she finds the time to do it all.

• WATCH: The Marketplace investigation on the new world of celebrity endorsements on social media tonight on TV and online.   

Harder still is to decipher which of those Instagram posts were bona fide candid snaps, and which were something a little more orchestrated.

Kardashian is perhaps the most successful celebrity in the social media age at leveraging her fame into endorsement dollars by hawking products and services to her followers on the sly.

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There's big money in it. Social media expert Frank Spadafora, the founder of D'Marie Archive, says between the Kardashian and Jenner families and more than 300 million collective social media followers, the Kids can command anywhere between $75,000 to $300,000 for a post across all of their feeds. When it comes to product endorsements, "the Kardashians...reign supreme," he said during an interview in Los Angeles.

Last month, Kim was robbed at gunpoint in a Paris apartment after posting pictures on social media of her jewelry, worth millions of dollars. Since then, her social feeds have been dark, but there's ample evidence to suggest endorsements are a major part of her online presence.

Six-figure price tags for major marketing campaigns may be nothing new in mainstream media, but in the nebulous world of social media, they're breaking new ground for the way they bend the rules. So Marketplace went digging to try to figure out where the line between marketing and reality really lies.

Consider the aforementioned fitness post. Kim, her sister Khloe and her other sister Kourtney have all declared their love for girdle-like get-ups known as "waist trainers" in recent years. In none of those snaps did any of them admit to having been paid to promote the product. But we've since learned that they were, because posts have been recently updated with captions that include the hashtag #ad.

Timothy Caulfield, an author and professor of health law at the University of Alberta, says celebrity endorsements like that are pernicious because they're a powerful new form of marketing, and they are taking over a medium that's getting more and more impossible to ignore.

"You don't know if they actually use it," he said, referring to Kim's famous waist training pic, "but I bet it moved a lot of product."

"It's all curated to look like we're catching them in a spontaneous moment, when in fact it's an advertisement," he said.

The Federal Trade Commission has rules that govern this type of native advertising on social media, and they state that paid endorsements have to be clearly and conspicuously identified as such. They also say the post should begin with a hashtag like #ad or #spon to stay within the rules.

Another recent example landed Kardashian in hot water, enough that she was compelled to delete her initial post and admit that it was in fact an ad. While pregnant with her second child, she sang the praises of a Canadian-made drug called Diclegis, which claims to help reduce the symptoms of severe morning sickness.

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The post ignited a firestorm of controversy because it leaves out any mention of the medical risks of the product — a requirement for any pharmaceutical ad in the U.S. under Federal Drug Administration rules.

Kardashian later deleted the tweet and replaced it with one that meets the FDA's requirements, but the horse had already bolted from the barn by that point — Kardashian got nearly half a million likes on Instagram, and the drug's maker says it plans to double production space due to rising demand and a full backlog of orders for the drug.

From Kim's perspective, "when you're a celebrity, any noise is good noise," Caulfield said. "And for the drug company, they got a huge amount of exposure."

New guidelines

At least one U.S. consumer group is pushing for change on the issue, and taking direct aim at the Kardashians. Truth in Advertising has complained both to the family and the FTC that there's deceptive marketing all over their feeds because paid endorsements must be stated in a clear and conspicuous way.

That's according to the FTC's own rules, which make it clear that you can't blur the line between authenticity and marketing on social media. The Kardashians' feeds are now on the radar of the watchdog as a result of Truth in Advertising's complaint.

"A basic truth-in-advertising principle is that it's deceptive to mislead consumers about the commercial nature of content," the FTC says. The FTC has the power to slap fines on companies when they break their clearly defined rules, something about which Canadian authorities haven't been as clear.

Canada's Competition Bureau says it is monitoring misleading online advertising in all forms, but won't say if that includes social media ads masquerading as legitimate posts.

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At the start of October, another organization, the Advertising Standards Council changed the guidelines for what they call "online influencers" and included this line: "No advertisement shall be presented in a format or style that conceals the fact that it is an advertisement."

But those guidelines still aren't enforceable rules. The ASC is a self-governing body that lacks any real teeth to punish scofflaws — yet.

"It's becoming a whole new regulatory realm," Caulfield says. "The wheels are already in motion...so I do think we're going to see different rules in the future."

No one disputes that its good to have some ground rules, but count Spadafora among those who reject the notion that there's something problematic about celebrities endorsing products and services in their closely followed digital lives.

"The game has changed, and you can either ignore it or you can be smart about it," he says.

That goes for both the celebrities and for consumers too, who he says are much savvier about marketing than people give them credit for.

"It's a fine line and social media followers are not stupid," he says. When all it takes to stay on the right side of the FTC's rules for advertising on social media is to clearly label a post with the hashtag #ad, it just makes sense for the celebrities and the brands they're pitching to stay on the up and up.

Try any funny business, Spadafora says, and never mind the regulators — it's consumers who will make you pay for your transgression.

"They can smell it from a mile away," he says.​​