Umm, no? Absolutely not. If you lie to someone in conducting a business transaction, that is textbook fraud. You can tell them "sorry, I can't share that information about our business process to protect trade secrets". You absolutely cannot say "we do it this way" when you don't do it this way. It doesn't matter if the output is the same.

You don't know, and don't need to know, what details mattered to your customer. If they're deciding between two different vendors, and you told them one detail of your process that happened to help them decide to go with you, it doesn't matter what that detail was. You defrauded them.

The AI vs human detail of this specific case is an irrelevant distraction. Imagine choosing between two cloud hosting services, one of which says it is powered by solar panels, the other says it's powered by the regular grid. In reality, both are powered by the grid. The customer never specified it, but environmental impact ended up being the deciding factor for them going with the first company. They were just defrauded.

Imagine two companies selling Widget X, which a buyer wants to buy to use as a part in their product. Both companies manufacture Widget X in China, but Company A says they make it in Mexico. A customer decides to order from Company A because one of their executives is Mexican and a bit patriotic. It doesn't matter that that's the only reason and it's frankly not a very good one; they were still defrauded.

If, as the original post claimed, they told their customers they were using AI, and they were in fact having a human hand-typing the summaries, that's fraud. It's insane that anyone would try to defend this.