Not sure why you're getting downvoted. Booking tickets under fake names, whether for your luggage or for random people you may meet at the airport and want to travel with, is fraud. Full stop.
Fraud requires you to deceive people. If AA tell you to book under a fake name for the spare seat, you do it, and then they cheerfully watch you walk on with whoever, that's not fraud. They know exactly what's happening.
an AA phone operator is not the same as an AA legal representative. they can make mistakes.
> If AA tell you
besides, the sentence touches explicitly on this claim
" paragraph 17(d) of the AAirpass Agreement is clear: “American’s failure to enforce any of its rights under this Agreement shall not constitute a waiverof such rights,” "
which is pretty much standard if you ask me. tolerance doesn't constitute acceptance and there was a warning about this, which he tried worked around using real names of relatives that then didn't travel for the vast majority of bookings, making further claim of ignorance tenuous at best and dubious in general.