Woods placed the ball in the wrong place on the 15th hole after seeing his shot end up in water, which meant that he had to put it in the nearest place to the original shot as possible.
However, replays showed the 37-year-old put the ball in the incorrect spot, and Faldo feels that Woods should have owned up to his rule-bending.
"He took advantage and he knows he took advantage, and he knows darn well you're not allowed to take advantage," Faldo told The Mirror.
"This is a very historic moment in our game. He should stand up and earn himself some brownie points and say to all his fellow pros: 'I've broken the rules, I'm going home and I will see you next week'".
"I am not going to use the cheating word [but] he should consider the mark this will leave on his legacy."
Woods was eventually given a two-shot penalty for the incident.