Well, if their current account contract says that you can withdraw any amount anytime, and they do not possess the capability of making good of such a promise, it IS fraud.
No, it's not fraud. We all understand under what circumstances the bank can and cannot keep that promise. It's not a secret.
The contract is saying that you can request a withdrawal at any time. It is totally obvious that the bank can't process a withdrawal if they don't have the money. They could add that clause to the contract, but there would be no point -- everyone understands that already.
This is the tradeoff we choose to make in exchange for an account that bears interest, rather than paying someone to lock our money in a vault. It's a good deal for the depositors. (Unless the government decides to renege on it, but that could happen without fractional reserves.)