They lied about the lip-syncing because doing so was a stipulation of the contract they signed with Frank Farian. The thing Rob and Fab were really guilty of is naivety. They were young and inexperienced and didn't read the fine print. Then, when Fab and Rob threatened to go public, Frank threw them under the bus and claimed he had nothing to do with it, despite the entire thing not only being his idea, but having long been his MO in the industry.
From my understanding though they weren't in a position of power and came from not the greatest backgrounds. I'd consider what happened to them exploitation and while they should be shamed a bit and not seen as artists the real assholes aren't them
When they signed their contract with Farian, they had no idea at all that they would be lip syncing. When they found out, Rob was pissed and confronted Farian, who threatened legal action against them if they didn't complete the contract. They weren't "in on it", they were coerced into going along with it.