I don’t know of anyone who lied about winning any important competitions, however in our district I know that students start clubs so that they can put president of something on their resume. It isn’t a lie, but its probably useless. Unless you are actually class president or editor of the school newspaper, I doubt schools care very much. They also know the difference between president of the debate team and president of the pretty flower club. The problem that many students have is that there are so many spaces on the common app you feel you need to fill in and then there is a whole separate category for awards. Of course students feel bad when they have nothing to write. Its perfectly plausible for a great student not to have been lucky enough to win a lot of awards. But those blank spaces make you feel inadequate.
In any case, I would much rather my kids went to colleges that actually wanted THEM for the people they really are.