How can it be fraud if Hyatt reduces the nights for OP? Plenty of example where Hyatt said they couldn't do it. In this case they reduced the night per OP's request. The burden here is on Hyatt to enforce their t&c, not on OP to know if 1 night is allowed or not.

I would agree it's fraud if somehow OP finds a way to unilaterally reduce his/her stay from 3 to 1 night, like hacking Hyatt's IT system or something.