Stars such as Rihanna, Rita Ora and Kylie Jenner are allegedly breaching consumer rights by not revealing when they are promoting products on Instagram.
Many posts on the social media site are not being clearly labelled as such, consumer rights group Public Citizen claims.
More than 110 stars have been cited as breaching regulations.
The US consumer regulator has now sent a warning and explainer to a number of celebrity users of Instagram about paid endorsements.
No accounts or users were named by the FTC in their warning, however.
The regulator's letter stressed that celebrities must clearly and conspicuously" disclose when they have been paid to endorse a product or received it for free in return for promotion.
In a statement, the Commission said: "In addition to providing background information on when and how marketers and influencers should disclose a material connection in an advertisement, the letters each addressed one point specific to Instagram posts - consumers viewing Instagram posts on mobile devices typically see only the first three lines of a longer post unless they click 'more', which many may not do.
"The staff's letters informed recipients that when making endorsements on Instagram, they should disclose any material connection above the 'more' button."
Recipients were also told that including endorsement references within a string of hashtags could still be considered a breach of the guidelines.
Use of the hashtags "#sp" - short for sponsored - or "#partner" were considered insufficient ways of alerting users to endorsement posts.