This is an artificial modern world problem.
For thousands of years people have told embellished stories, and humanity has thrived upon it. Tall tales, fish stories. Heck, that's still the average person's experience unless they've really worked their critical thinking muscles.
Today's working adults are used to the short thirty-year "safe space" of smartphones and internet. We grew up in a temporary meta stability where "truth" was "recorded" and could be "relied upon", and now that the fundamentals are shifting, we're complaining that the physical world is amenable to storytelling and imagination once again.
Cry me a river. This is awesome and is a direct consequence of everything I ever wanted the future to be: magical creative superpowers. I wanted to graduate into the world that is emerging now rather than spend the first third of my career in incrementalism and slow progress.
2008 - 2020 sucked. What a total lull. AI is healing these things and putting us back on track for the jet pack future we grew up dreaming about. It's taking us back to a creative world without shitty platforms controlling what we say and do, and without a ceiling on what we can accomplish.
It feels like every day we're unwrapping a new present or several. Not small things, but reality-shattering things that fill me with inspiration to build and explore. It's so much fun.
To tell a story, to even exaggerate one is something completely different from providing "prove" it did really happen exactly the way it was told.
There are many many people that will take an image as an undeniable fact of the real world. While before you could fake(photoshop) things it took more time then 30 seconds.
I wouldnt regulate these aspects, because I believe pandoras box is already wide open. Regulating anything wouldn't change much.