It hurts everyone in a certain way. The fellow does such a thing in order to attract students without having to back it up on the mat. Credentials are just that: something you can show someone to prove that you have accomplished something so that you don't have to prove it every time. Some folks are quite old and can't "back it up" like they used to be able to do, but they still have knowledge to impart. Sort of like the character of Mickey in the Rocky movies. He couldn't have beat up Apollo Creed himself, but he could teach Rocky how to do it. So if the old fellow has a certificate of rank from a known source, it tells the students something about him, or it should. If it's fake, or merely bought, then it doesn't tell the student anything and it's merely a form of false advertising. Enough of this goes on, and pretty soon anyone with rank gets questioned.
If someone writes a bad check to someone else, it might not directly "hurt" you, but if that sort of thing happens enough, then pretty soon people stop taking checks from anyone. Then it does hurt you if you only have a checkbook with you and you need to buy something. You could come up with a lot more examples of this type of thing.
People who have earned their rank honorably, don't like hearing of those that didn't. It's human nature not to want the thing you've worked hard for with blood, sweat, and blood, (no tears in Kajukenbo ) to be handed out by some factory for a sum of money. It sticks in the craw, and it should.
When you talk of the Parkers, Emperados, Chows etc. and try to use them as examples of self promotion or promotion by those outside of their art, you are making a false argument in my opinion. They were the Originators of their arts and after receiving rank from their original instructors, they went on their own. They were the top dogs. They had to promote themselves, or get it through the acknowledgement of others, because there wasn't anyone else in their arts to give them rank. They did have to prove it on the mat and by the quality of their students. But these days, there are plenty of qualified instructors in Kenpo and Kajukenbo etc. so one doesn't have to strike out on one's own and self promote. Those that do such things now, are generally doing so for nothing more than money by trying to attract students under false pretenses.
Emperado's Original Method Kajukenbo
Under Prof. John Bishop