Fake +
folklore = fakelore.
Stories and songs written by professional authors as reproductions of the oral traditions of historical and ethnic communities. Can also refer to mass-produced reproductions of aboriginal art.
In American folklore, Paul Bunyan and Pecos Bill are examples of heroes wholly fabricated for a reading audience-- they were not part of an oral tradition of lumberjacks or cowboys. Hyemeyohsts Storm's stories of Jumping Mouse in Seven Arrows have no known analog in the Cheyenne or any other Plains culture.
Fakelore is primarily passed on through the children's book and educational textbook market, which hopes to expose children to diverse cultures. So words, images, and characters associated with an aboriginal culture are combined with an eye towards fine illustrations, age-appropriate storytelling, and specific Westernized themes (family, the environment, moral behavior), rather than remaining authentic to the culture being represented. While folktales have always evolved in an oral tradition, authors who "improve" style, character, plot, and theme of traditional stories (perhaps with an eye towards teaching reading, or selling books) do so outside of the cultural context of these stories. Placed in book form, the fakelore can replace folklore as "authentic" representation, due to the pre-eminence of written literature in scholarship over oral literature.
Fakelore can becomes folklore, as its origins are forgotten, and the story or song becomes part of an oral culture: for example, the song, "Rudolph the Red-Nosed Reindeer," invented by Robert May, an advertising executive at Montgomery Ward in 1939 for a Christmas promotion, is a fundamental part of many American family's holiday tradition. (May's brother-in-law, Johnny Marks, wrote the bestselling song version that Gene Autry recorded in 1949).
Sources:
Mikkelson, Barbara and David. "Rudolph." Urban Legends Reference Pages. 16 December 2000. <http://www.snopes2.com/holidays/christmas/rudolph.asp> (21 November 2002)
Scott, Melanie. "Faking It: The Appropriation of a Culture." First Nation Information Project. <http://www.johnco.com/newspage/fake.htm> (13 October 2000)
Singer, Eliot A. "Fakelore, Multiculturalism, and the Ethics of Children's Literature." <http://www.msu.edu/user/singere/fakelore.html> (13 October 2000).