Peel told the News of the World that her girlband Lola, which also included Mark Wright's sister Jessica, had to pretend to have a record deal with Universal. She also claimed that extras are hired to play the part of locals.
"Viewers have no idea how fabricated it is," she said. "Most of it is staged, lines are rehearsed, some stars are genuine but not many. Scenes are stopped because someone hasn't shown 'enough emotion' to make the cut, so they end up having to do it again and again.
"The producers ask us to be realistic - but then make us do up to ten takes. When they get sick of us trying to be natural they prompt us in what to say. Words are put into mouths. Everybody is told to elaborate, repeat themselves, show more emotion and even laugh on cue.
"All of it is set up for entertainment. Everybody rehearses. The bosses want this to be a sexy show with glamorous people. Before the camera goes on they tell people to flirt, flutter their eyelids and give it all they have got. Scenes are set up."
Peel - who no longer appears in the show - also claimed that Amy Childs doesn't work as a beautician in the salon she is filmed in and that Lauren Goodger's job offer in Dubai was made up to add suspense to the show.
She added that the stars are now inventing their own storylines over fears that they will be axed for being boring.
Goodger's engagement to Wright has also been branded fake, which the pair have both denied.