As I recall, the hype about them being the Beatles when the first album was released was spontaneous and grew organically but was not initiated by teh group or Capital records. But once it achieved critical mass, capital chose to ride the wave of publicity and not offer up much information to set things straight. I bought the first record as a result of the publicity and wondered myself as did most others.
Then by the time teh second lp Hope came out, which IMHO is a hugely unapprciated or underrated release,cApital and the group suffered the backlash as it became clear this was really not The BEatles. Then Klaatu descended further into obscurity over time as a result despite continuing to produce perhaps some of their most Beatleesque tunes ever on the later albums Sir Army Suit and Endangered Species.