Writing songs in the folk idiom is perfectly acceptable, and many such songs acquire the traditional label, even though only written decades ago. Reworking old songs for performance is also generally acceptable ( some of a more traditional persuasion may disagree.) What collectors find problematic is people who invent histories for songs which then become accepted as truthful accounts.
The late John Meredith was less than complementary regading Lloyd's song collecting in Australia.
'In my opinion, the best memorial A. L. Lloyd could have would be a bonfire of all the phony concoctions he has passed off as Australian folk songs over the last 25 years or so, the bulk of which has little in common with Australian material collected in the field.' He went on to say that most of Lloyd's texts had been acquired from the work of other folklorists, including Meredith himself, and that he had fitted to these songs 'whatever British tune Lloyd considered suitable--in other words, concoctions'
(A.L. Lloyd in Australia: some conclusions.
http://www.thefreelibrary.com/A.L.+Lloyd+in+Australia%3A+some+conclusions.-a0154804211
(John Meredith, 'A Depreciation of A. L. Lloyd', Stringybark & Greenhide, 4.3 (1983), 14)