Folklorist here! Fanfics are NOT folklore: they are individually authored original works of art. While they're not commercially published, they are stable texts by named authors; the "using pre-existing characters" thing, the use of well-known tropes and plotlines--all of that is found in regular formally published literature.
For something to be folklore, it needs to be informal, traditional, and exhibit dynamic variation. "Informal" means that folklore isn't a top-down, official phenomenon: it's customs rather than laws, folk narratives rather than published stories, grafitti instead of art in a museum. Fandom, due to its relationship to modern copyright, is an "unofficial" space, and fanfic is published unofficially--but they're still, well, published: written, shaped, edited, posted in an archive with a stable text as an author's original story. The fact that one can plagiarize fanfic, and the community gets angry about that, tells you that fanfics are understood to be an individual's artistic/intellectual property--just because you can't make money off of it doesn't make your original story not, well, yours. Folk narratives, otoh, aren't really plagiarizable--they're formed by a group, and don't belong to any one person.
"Traditional" means PASSED ON. It doesn't need to be passed on over many generations, it just needs to move from one person to another. Think of memes (prime examples of digital folklore): if you make a funny picture on your computer but never show it to anyone, it's not a meme--a meme, by definition, needs to circulate. It needs to start cropping up in multiple spaces from multiple sources, and also to start exhibiting variation (I'll get to that in a second). A story needs to move among people, and retain enough of its form/contents to be recognizable as having been passed on, to be a folk narrative. Fanfic has a bunch of well-worn plots and motifs (Coffeeshop AU! There's only one bed!) but so does every single other literary genre. Fanfics are still individually authored texts that use and engage with existing narrative/genre conventions: this is a very different beast than the way that folk narratives circulate. Like, Toni Morrison uses pre-existing folk narratives all the time in her books, but Beloved and Tar Baby aren't folktales.
Last, folklore has to exhibit "dynamic variation." That means that folklore is, by definition, something that gets adapted to different contexts by different tellers. A fanfic on an archive--just like a published novel--is a stable text: it always has the same sequence of words in exactly the same order, and it doesn't change. (Digital texts are more easily edit-able than print publications, but they're still understood as stable texts.) We can talk about particular VERSIONS of folk narratives, like the Grimms' vs Perrault's versions of Little Red Riding Hood: the thing is, both the Grimms and Perrault were explicitly NOT creating original work, they were capturing and pinning down particular iterations of a story that was already circulating out in the wild. (The Grimms, as pioneering folklore scholars, were more "scientific" about this process than Perrault, who was overtly intervening in the story; the point is that all of them were recorders, not originators, of the story.)
Folk narratives are records of group consensus, far more than of any individual teller. You can learn a lot about a culture from its formally published literature, but that literature will always be more reflective of the individual artist; folklore, because it's been shaped by multiple people over space and time, is going to be more expressive of that culture as a whole--all the most relevant and useful stuff will be retained, and the irrelevant stuff falls away as part of the folk process.
It's really important to remember that these concepts of literature vs folklore really solidified during the late 18th-early 19th century, and are entwined with modern notions of copyright. Literature is an original, stable text written by an individual author that is understood as that author's intellectual and artistic property--this is true even if the story isn't commercially published, as in the case of fanfic. People get really hung up on the fact that fanfic uses pre-existing characters and plots, but again, that's something that literature has been doing since, like, the beginning of time. "Original" refers to the story itself--the plot may be old as balls, the characters may have originated in a different text, but that author's particular artistic creation in their own words is a piece of literature. Folklore is NOT like that: it's a passed-on story that has no stable text, that crops up in multiple spaces from multiple tellers. It's not original, it's not individual, it's not copyrightable. Fanfic is literature that circulates unofficially, due to copyright laws; individual fanfics may not be copyrightable (unless they're for a canon that is out of copyright), but they're still original, individual, stable texts, not folklore. Francesca Coppa is a terrific fan studies scholar, but I WISH someone had told her that subtitling her anthology of fanfic Folktales of the Digital Age is so, so wrong.
Fandom is a folk group, but not everything produced by members of a given folk group is folklore. A folk group is defined as any group of people with at least one linking factor: we all belong to multiple, overlapping folk groups. Even highly formal and official groups--like the Iowa Writers Workshop, or the Supreme Court--operate as folk groups, in the sense that they have informal, traditional aspects to their group: shared knowledge passed along informally, anecdotes, gossip, rumors. That's folklore. The novels or laws those groups produce, though, are not folklore. And neither is fanfiction. Fandom is a folk group, and fans place a high value on community engagement and collaboration: however, fanfics are still individually-authored pieces of literature, and that doesn't change just because the artistic discussion and collaboration isn't in a formal space (and is made visible through the digital medium).
You want to know what IS folklore, in a fandom context? Anecdotes, rumors, gossip, jokes, memes, certain formats like callout posts, etc. Also, FANON. The term, "fan canon," gives you a clue: it's an interpretation of the canon that's widespread enough to become group consensus. Even if there's only, like, 5 people who are sharing a piece of fanon, that's still a group, and they have a consensus. Fanfics can be influenced by fanon, just like literature can be influenced by folklore, but they're still different models of expression.
Does all this make sense? If you're interested, the best single-volume introductions to folklore studies are Lynne MacNeill's Folklore Rules, and Barre Toelken's Dynamics of Folklore.
