In many cases, it is people wanting more than they have, and feeling they got cheated by society somehow.
It is not limited to the martial arts.... I saw a case where an Army E-9, that's right, a Command Sergeant Major, added all sorts of phony accomplishments to both his personnel folder and his uniform. As the Military Judge noted on sentencing, the crime was "so stupid" because it was done when the man was already promotable to E-9. Apparently, this guy thought achieving the highest enlisted rank wasn't enough, and that he'd been denied various things along the way. So he finished his career with a conviction... so they do not always get away with it.
Others feel that as a marketing tool they have to be 22d Dan Soke Grandmaster, as if excellent skills by a go dan in an established art might not be enough to attract any students. Perhaps having an excellent side kick would be thought ordinary.... so how about claiming a secret ninja chi powered no touch knock out ability?
While I personally do not absolve wrongdoers of responsibility because of society, we do need to recognize this is a ticket punch, glam society we live in. Remember all the ridiculous awards heaped on Michael Jackson, things like "Entertainer of the Millenium"..... well, until his unnatural affinity for young boys came to light. Of what real value are these 'honors', in any sense?
Too many want the paper or the trophy, irregardless of any real accomplishment behind it? Who can spend 30 years in an art - - - why after just 2 years it's 'an oldie', or on the wrong side of 'what's hot, what's not'.