Fraud occurs everywhere, in everything, including in the martial arts. First, one must accept that there are frauds in the martial arts who defraud and cheat people. Then, one must learn how to recognize fraud and defend against it.
There are hundred of thousands of legitimate martial art instructors around the world. However, there are also tens of thousands of illegitimate frauds that I referred to as pseudo-masters. Most frauds are not content just making themselves black belts, they tend to go all the way and make themselves "masters", "professors", and "sokes", with all kinds of false certifications, titles, and awards from fellow frauds to use as proof of their status. Therefore, the greater the claims, the more skeptical you should be.
Some frauds have lied for so many years that they begin to believe their own lies and really think that they are what they claim, but this does not change the fact that they are frauds. A fraud with good intentions is still a fraud.
Legitimate masters have no fear from scrutiny, it only reinforces the trust people have in what they have to offer. Whereas, pseudo-masters become very defensive when scrutinized and attack you, usually verbally, if you dare question their claims. They will accuse you of being a bad person for questioning their integrity and accuse you of being judgmental. Most will quote pseudo-spiritual gibberish about how we should all be one with the universe and trust other people. Since they are con men and women, every thing they do and say is a lie, or is based upon a lie or a half-truth. They make their livings from the con, so they are good at it. As a martial arts consumer, you need to be aware of martial arts fraud, how to identify it, and how to avoid it.
It is painful to learn that you have been the victim of fraud and that the and rank you aquired is not legitimate; and that all the time and money you put into years of training has been wasted. It is difficult to accept that your rank and certifications are useless outside the front door of the pseudo-master's school or organization. Therefore, it best to be informed about pseudo-masters before you fall prey to them.