The Keeping Up With The Kardashians star, 24, received $ 250,000 (£ 204,908) in 2017 for an Instagram post announcing the doomed project.
Kendall, along with a number of other celebrities, have sued them for the promotion of the festival by a bankruptcy trustee who seeks to recover the money lost by investors.
The model denied responsibility for the lawsuit, but agreed to make payment after mediation with trustee Gregory Messer.
Kendall has 129 million followers on Instagram and TMZ reported that documents filed at the US Bankruptcy Court in Manhattan showed that she was paid to use her subscribers to promote the event.
The reality star also received $ 25,000 (£ 20,490) from Fyre Media Inc., which was the company owned by Billy McFarland who founded the festival.
The trial allegedly accused Kendall of showing a “manifest lack of good faith” because it did not indicate that the Instagram publication now deleted was an advertisement and that she was paid for it.
Showbiz Editor Choices
The lawsuit allegedly reads that the model failed to “inform her fans and followers that they ultimately decided not to attend the Festival due to problems with the Festival of which they and their agencies were particularly aware.”
The doomed Fyre festival has been marketed as a Bahamian-based luxury music festival, with McFarland raising $ 26 million to help promote it.
Hundreds of thousands of dollars were paid to artists and musical models for their appearance at the festival, which was scheduled to open in April 2017.
It is claimed that the money paid to celebrities and concerts should be returned as they were part of McFarland’s plan to defraud those who invest in the festival.
Do you have a story to sell? Contact us at [email protected] or call us directly on 0207 29 33033.