Ex-MTV Star TOTAL PRUDE ... At Naked Beach Party!

1/9/2014 11:21 AM PST

Ex-MTV Star Olivia Palermo -- TOTAL PRUDE ... At Naked Beach Party!

Nude beaches aren't always as cool as they sound ... just ask former MTV star Olivia Palermo, who learned that lesson the hard floppy way during a trip to the Caribbean.

Palermo -- who starred on the reality show "The City" -- hit the sand in St. Barths Wednesday with her fiance ... and even though she was in a total nudie zone, Olivia refused to join in on the public exposure.

But while the old man dong was out in full force ... an uncomfortable looking Olivia eventually laughed the whole thing off.

Lesson learned.