I've never had that happen to me, and I hired a fair number of people over the years. To me it always seemed like a scare story of what might happen if you didn't do loads of algorithm questions.

Everyone I hired could do the work, regardless of whether I asked them algo stuff. The only people who didn't work out had non technical motivation issues.

I guess there's always another side to experience, because it seems like you've come across this a lot.