That's about right, Al. The process has almost always been a two-way affair. When a song is being used by sophisticated people it is an art song. When it is being used by the 'folk' it is a folk song. But nowadays that's all been muddied by the presence of a 'folk scene' which perhaps gives us a 3rd category, or perhaps when it is being used by the folk scene it is both art and folk. Now I'm confusing myself!!!!

There are plenty of fairly uncomplicated examples, 'Barbara Allen' for instance. For most of its life it has been a very widely spread folk song, but Pepys heard it as a very high-class art song being sung in a London theatre, possibly the original. The various sheet music versions I have for singing round the piano I would call art song, and perhaps the versions on Broadsheets. The burlesque versions I would also class as art songs.

To go back to the thread title, I interpret the question as being applied to deliberate deception, not art/folk song.