So long as Tesla correctly explains what FSD does to its paying customers, then it is not fraud. It is inconceivable that anyone could go through the Tesla buying process and check the box for "FSD" without reading the clear description of what the feature actually is. This isn't like installing iTunes, it adds $8k to the purchase price of the car and it's not optioned by default.
It's true that some people who haven't purchased a Tesla vehicle might be misinformed about FSD. But it's not fraud if they aren't customers.
I don't like the FSD name and I think Tesla should change it. But I can see how people can come to different conclusions about it. The word "full" can mean very different things depending on how you think about the word and the context of its use. The two extremes:
MAXIMALLY NARROW — "Full" self driving means the car can reliably control the vehicle perfectly in all circumstances, on all road surfaces, at all times, in all conditions. This is something that most HUMANS are incapable of, by the way. So under this definition, most humans aren't "full" drivers either.
MAXIMALLY BROAD — "Full" self driving can perform the "full" set of driving tasks, imperfectly, in certain circumstances, on some road types, only at some times, only in some conditions. Doesn't even mean it can drive in these limited situations well, only that it can drive them.
Most people would agree that a realistic definition fits somewhere between those extremes. But there's no question that FSD satisfies the maximally broad definition.