That I've seen, the problem is worse than that. A movie merely says it's "based on a true story". If you're a lawyer or literature professor, that "based on" might be correct usage - since 40-ish percent of what the movie told was true. The other 60-ish percent was utter fiction.

Meanwhile, people who saw the movie and found it decently engaging are busy convincing themselves that it was 99% true. And 99% of 'em will never bother to check.