Fraud in the scientific world has generally taken the form of fabricated results, but I don't agree that the word has transitioned away from the common and legal meaning of deception in order to get a benefit.
Even if it had though, I'd be perfectly comfortable calling this fraud in this discussion based on the common meaning of the word. Just because we're talking about a scientific context does not mean we need to use the scientific-jargon versions of words - we're not in a scientific context ourselves.
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And I'd disagree that this is just about the "letter of the ToS". While that is perhaps a necessary component in order to prove the deception, this is really about the cultural expectations of the community that merely happened to have been encoded in the ToS. The fraud would still occur without the ToS, it would merely be next to impossible to show you didn't simply misunderstand the cultural norms and what your actions would lead others to believe.
I disagree with your implicit assertion regarding the common meaning of the term in this context. I believe that the term fraud as commonly used when discussing things in a scientific context has always (for at least my entire life) been taken to refer to knowingly and intentionally falsified research results (also falsified appointments, falsified affiliations, falsified authorships, etc).
> deception in order to get a benefit.
The point being that reckless or negligent conduct is not commonly taken to constitute deception. There's a reason we have different terms for these things.
Sure, you can say "well he exhibited reckless disregard for his professional duties when he opted not to bother reading the citation section that the LLM shat out, and reckless disregard is sufficient to meet the legal bar for fraud, and also the ToS specifically says that you certify that you validated all references manually so bam! two counts of fraud legally speaking" and you wouldn't be wrong but the distinction between "legally fraud" and "fraud as is commonly meant when talking about scientific papers" is essential to effective conversation in this particular instance.
> Just because we're talking about a scientific context does not mean we need to use the scientific-jargon versions of words
The context is essential because (obviously) it affects how people interpret the meaning of your words. A fraudulent submission to a scientific journal has a specific and well understood meaning in common usage.
If you still disagree with me imagine polling a bunch of tenured career researchers about what they would think if they read the statement "X caught submitting a fraudulent paper to journal Y". I can just about guarantee you that none of them are imagining hallucinated citations.
We're not "discussing things in a scientific context" here. We're in the context of a startup/programmer news aggregator discussing scientific news. We are not "a bunch of tenured career researchers" discussing amongst ourselves so the jargon appropriate for that context is not the appropriate jargon - rather we need to use the jargon that the startup/programmer news aggregator crowd would understand.
That said even in a scientific context I still disagree and your example at the end is a fine starting point. By comparison imagine one of the profs said told the others that their house was burgled. The others would probably be thinking that things like TVs or computers or money was stolen, and not that the thief simply stole all their spoons. That doesn't make having all your spoons stolen not burglary. Likewise the profs expect that the results or authorships are where the fraud occurred because those are the best places to extract value with fraud, not by avoiding the simple act of writing the paper with correct citations. That doesn't mean fraudulently using an LLM to hallucinate a paper from your (we'll suppose for sake of argument) actual results is any less fraudulent though, it's just an unexpected form of fraud.
Edit: I want to be clear that this is not my argument: "well he exhibited reckless disregard for his professional duties when he opted not to bother reading the citation section". I see other people making that argument, and I'm not sure if they're right or wrong that that's another reason why it is fraud, but I'm certain that we don't even need to reach that question.
My argument is that it is fraud to represent the paper as a scholarly work when you don't know that it is correct. It is not that you are taking a risk it might be wrong, it is that you are actively representing that you know it is correct and if you do not know that you are committing fraud even if it happens to be so. This is a case of intentional deception, the deception being the representation that this is scholarly work, not reckless disregard for the truth as to the accuracy of the citations.
There are actually a surprising (IMO) number of career researchers on this site. Regardless, disregarding the context specific meaning will at absolute best result in a disjointed conversation where people are talking past each other. Worse, in this instance people are debating how arxiv (and other venues) ought to handle these sorts of things at which point you are well and truly into the territory where you need to get the field specific terminology right.
I concede that I was sloppy when I referred to what the researchers would be imagining. I should have phrased it as asking them if they thought that transgression X constituted fraud.
Regardless, hopefully you can see the idea that I was attempting to communicate? The burglary example isn't equivalent because while the spoons are unexpected the end result is still an event that most people would agree constituted burglary and resulted in noticeable harm to the victim.
I'm struggling to adjust your example on the fly but perhaps if it were the contents of the yard waste bin that had been pilfered? That's still technically burglary but I think most people would view it quite differently and might question the wisdom of prosecuting it.
I think the key difference here comes down to motivations as well as impact. Falsifying results (for example) is an active attempt to counterfeit the core value proposition of the endeavor and the end result of that is proportional - personal benefit directly as a result of the falsification and significant damages to anyone sufficiently bamboozled by the fiction long enough to base any decisions on it. Whereas no one using an LLM to generate just the bibliography is doing that to get ahead (at least not on its own) and any damages are limited to the reader wasting a few minutes trying to figure out the extent of the issue and who to contact about it.