I'd argue it is sneaky to put the competitor's name first, as most people will click quickly to move on to the website.
Hopefully the metrics show that the latter is mostly happening.
It's only fraud if the advertiser counterfeits XYZ's brand on their website.
The ad can violate trademarks even if the site behind the ad is squeaky-clean.
If putting the other brand name first causes consumer confusion in certain places, that's a problem, even if they're not lying or even doing it on purpose.