This might be better suited for IMHO or Debates but since it involves books (and to a lesser degree movies) I’ll put it here.
Some books that are released as non-fiction are demonstrably proven to be works of fiction. Some of the more famous:
*James Frey’s Million Little Pieces, which has several major “essential to the plot” moments that never happened.
*JT Leroy was a male former child prostitute and memoirist who turned out to be a middle aged female writer) so that’s a no brainer- it’s fiction.
*Clifford Irving’s collaborative “autobiography” of Howard Hughes (which, from the sections I’ve read, is excellent incidentally) was a hoax; Irving had never had contact with Hughes.
Other memoirs later proven fake.
Some books are trickier however. Midnight in the Garden of Good & Evil for example:
Non-fiction-
*John Berendt really did live part time in Savannah in the 1970s and 1980s
*He really did get to know many of the people involved and many local eccentrics
*Most of the stories and people in the book are real or based, fairly closely, on real people and events
*Jim Williams really did go on trial 4 times for murdering his out-of-control redneck boytoy and really did hire voodoo priestesses (and even mentioned the “psycho dice” game from the book in his will)
*Berendt really did attempt to do a piece on a black debutante ball that was crashed by the Lady Chablis
Fiction:
*Berendt inserts himself in several scenes to which he was not actually a witness (e.g. his encounter with Jim Williams’ out-of-control drugged up redneck toyboy never happened; Berendt didn’t even meet Williams until after the murder
*The book is generally “de gayified”- Berendt (who is openly gay) comes across as an asexual and sometimes invisible narrator (a not bad in and of itself stylistic choice) but in fact most of the people he got to know early in Savannah were fixtures in Savannah’s gay scene (e.g. Joe Odom- the horndog who lives with Mandy in the book- was in fact a more-often-gay-than-straight bisexual who only had a platonic friendship with Mandy) and in fact many of the anecdotes in the book were stories he heard, at least initially, as gay bar gossip
*Berendt never actually went with Williams and Minerva (the voodoo priestess) to the cemetery, the event that actually supplied the title; he got the story first-hand from someone who had and in conversations with Williams and Minerva
Now, on the one hand it’s easy to say “Well, Midnight is a work of fiction because Berendt wasn’t where he said he was. OTOH, if Berendt had classified it as fiction, that would have been problematic as well since the key characters- Lady Chablis/Joe Odom/Jim Williams/the other kooky and spooky characters really were real people and actually people he knew
Some of the events he tells about really were things he did participate in. So… ultimately it’s a blend of fiction and non-fiction, but which would you count it as and why?
On the other extreme, having lived in Milledgeville (where Flannery O’Connor lived), some of her characters are very clearly based on actual (non-famous) people and events in the town- she never denied this. Milledgeville history is also mined for the novel Paris Trout, in which though the names are changed (including the name of Milledgeville, which was silly since he identified its stand-in of Cotton City as the Civil War capitol and practically includes a street map) the story of Trout himself- his loan sharking to the black community, killing a little girl whose brother owed him money for a car, the way he avoids prison, his abuse of his wife, his increasingly psychotic paranoia that includes covering the floor of his bedroom in glass plates (to see if somebody has walked in) and putting lead sheets and pots under the bed (in case somebody tries to shoot him from downstairs), and the murders/suicide that occur during a Sesquicentennial celebration that makes people mistake the gunfire for fireworks, his safe being opened after his death to find jars of urine and no money- ALL of those actually happened (though the real man’s name was Marion Stembridge instead of Paris Trout). Dexter changed very few things in packaging it as fiction- he added a fictional romance twixt Mrs. Trout and one of the lawyers her husband killed (which was rumored to have actually happened), added a backstory to the black girl Trout/Stembridge killed (she’s now a foster sister instead of a biological sister to the man who owed Trout money), adds a couple of side characters and another victim of the killing spree (not an ‘important’ one).
Calling it fiction without even a “based on a true story” byline seems more like cheating that calling Midnight non-fiction.
A very similar thing happened in the movie To Die For, the Gus Van Sant/Buck Henry/Nicole Kidman movie that’s at least as close to the Pam Smart story as the Pam Smart Story. A sociopathic social climbing young New Hampshire teacher has an affair with a teenaged student from a dysfunctional family, hires him and a doofus friend (for a ridiculously small amount of money and some CDs) to kill her husband, and the plot is unraveled by a female classmate who she’s threatened to kill and called “white trash who nobody will believe”; they changed the ending of the true story The Pam Smart character is murdered by a mafia hitman hired by the husband’s family and the husband’s ethnicity was changed to Italian (in reality I think he was part Italian) and there’s some dark humor added, but any fool could see the inspiration, yet it bore the "any resemblance to real people is coincidence” disclaimer in the credits.
Compare this to Bully, a film about the real life murder of ‘bully’ Bobby Kent, in which more liberties are taken than with To Die For or Paris Trout. Among the biggest is that the real Bobby Kent was a 6’1 first-generation Iranian steroid abusing bodybuilder (pic) is changed to a far more Anglo and almost impossible to buy as physically intimidating Nick Stahl (the scrawny actor dwarfed by Charlize Theron inthis pic).
So, at what point does a book or film become fiction in your views (i.e. beyond the embellishments or license covered by the standard “some events have been changed…etc.” disclaimer)? And should works like Paris Trout or To Die For- works of “fiction” that are completely identifiable even to details- have to have disclaimers stating “This is a work of fiction inspired by x y and z” instead of the “this is a work of fiction and any resemblance to real people living or dead is coincidental” disclaimers that both in fact have? (The same could be asked of episodes of Law and Order and other shows where real life recent cases are dramatized almost event per event.)