As the writer of the Gizmodo exposes said, it was like cheating Farmville.
The way it works is that if you don't hook up within the specified time (I believe it's 120 days) then they refund your money. And technically speaking, this is not a lie.
What they don't tell you is that they process the refund in the form of a check, with their name on it, mailed to your home address.
Given that the entire concept of the site is to attract users who want to keep their activity secret from the people they live with, how many people will actually go through with asking for their guarantee to be honored?
(I know that there are legitimate uses of the site that don't require going behind your spouse's back. But it's pretty clear that most of their user base was using it that way.)
Ashley Madison didn't invent dating sites, and certainly didn't invent this MO. I'd wager it's pretty standard for all dating sites. AM just happened to be the first (or most prominent?) dating site that advertised having an affair/cheating.
I see no fraud here -- only bruised egos, a few ruined marriages, and the embarrassing truth that some men will go to extreme lengths to speak with women, even when it flies in the face of absurdity.