Oxford dictionary definition :
Wrongful or criminal deception intended to result in financial or personal gain
Wikipedia definition of hidden city :
Hidden city ticketing occurs when a passenger disembarks an indirect flight at the connection node. Flight fares are subject to market forces, and therefore do not necessarily correlate to the distance flown. As a result, a flight between point A to point C, with a connection node at point B, might be cheaper than a flight between point A and point B. It is then possible to purchase a flight ticket from point A to point C, disembark at the connection node (B) and discard the remaining segment (B to C).
Thus because hidden city ticketing has no use other than personal financial gain, a person would be effectively committing fraud, since they will be knowingly buying a ticket with the full intention at the time of purchase of discarding the segment.
Do it once and the airline might turn a blind eye, but make a habit of it and that's where the word fraud comes into play.