I used to do a lot of hiring interviews long before ai and this exact situation has happened many times. People have been added to some project doing x haven’t really done much or engaged in it. They then see you need someone doing x then they add it to their resume.
However, I do agree not being able to fully talk about a thing you have been working on and worse misrepresenting the extend of your involvement are red flags.
Has nothing to do with AI though. Also sounds a bit like they wanted to say: “Ai encouraged me to exaggerate a bit” which again just means they wanted to shift the blame which is another red flag.