Have you ever worked with someone you were convinced not only lied on their resume, but lied about every single part of their resume?
There's a huge difference between giving yourself a boost on paper in order to secure a gig, and completely lying about having necessary skill-sets for a job. The former is a common tactic that helps lots of qualified people land jobs in a rough economy.
The latter, however, can put coworkers into a horrible position. When someone without necessary knowledge is hired, and they double down on their lack of knowledge instead of learning, it can slow down the workflow and speed up the office drama.
When you're training somebody and come across something new to them. If you explain the law/procedure and they say, "yeah I know that". Then why the hell did you do it that way if you knew? It's ok if you didn't know because I hadn't taught you that yet. Because now I can't trust them to be honest about their capabilities. So I have to check everything that person does because I can't be sure if they actually understand it.