I think the main issue at hand is them trying to pass themselves off as artists for typing in a couple words into a text box and letting the AI create an image for them by stitching together pieces of art that it scraped off of the internet, usually without the consent of the artists. It's like commissioning an artist to draw something for you and then claiming that you are the artist who made it, but the artist being commissioned turned out to be someone who just takes other people's art and traces over parts of them.
On some websites, such as Art Fight, AI generated images aren't allowed because it falls under the rule prohibiting art theft. AI generated images also cannot be copyrighted.