It matters if it is misrepresented. People are free to listen to what they want but they should know whether they are getting AI stuff or real stuff, especially considering the "band" in question faked the fact that they were real. That would be considered fraud normally.
Back in the mid 80's there was a show called "Knight Rider". You may know of it, from the iconic TransAm it used as the hero car. Guessing by the size of your user id, you should know it well.
Anyway, the music. The show didn't have the budget to license contemporary music, but they did have the budget to hire a sound-alike band to mimic the songs and skirt copyright and licensing restrictions (especially overseas restrictions). Sometimes, it was obvious it was a cover band. Other times, you had to listen really carefully to hear the differences. All this is documented in the book "The Knight Rider Companion", if you care to see my source.
To the point: The Knight Rider audience didn't much care who played and sung the songs; we wanted to see spectacular stunts and Michael Knight win the day. Was the music misrepresented? Maybe; can't remember that much. Was it fraud? By your definition, yes it was.
Curious about your thoughts on this.