Isn't it against the law to blatantly lie to the viewing public? If the TV series Fargo is not true then why do they say it is?
No. It is not against the law. Otherwise the Coen brothers (and many others) would be in jail.
Also, to just name one other occurrence of the "true story" bit before a movie, eleven years earlier, 1985's Return of the Living Dead also claimed to be based on a true story. The trailer is here, and the movie (for however long it lasts), is here. EDIT : The YouTube version doesn't have the screenshot I was talking about, so I captured it from my DVD copy:
And that movie is about lucid, fast zombies.
Movies are not encyclopedias. They are not facts overseen by a committee to ensure accuracy. Even docudramas and biopics are not 100% accurate.
If you're wondering how he eats and breathes
And other science facts,
Just repeat to yourself "It's just a show,
I should really just relax
For Mystery Science Theater 3000."