There's intent, deception, and damages so it's definitely fraud. This isn't a mundane matter of creatively using someone's API in a way they don't like. He came up with a scheme to extract money from them. The ToS is the contract governing payments in this case (IIUC).

It's the difference between violating a no skateboarding sign in front of a shopping mall versus a no trespassing sign at a military base. They're both "just signs", right?

I guess forging documents and selling you a house which I don't own shouldn't be an actual crime either? The patterns of behavior in both cases are functionally indistinguishable.