Rainbow moonstone is a trade name, and mineralogically it is not moonstone at all: it is white or colourless labradorite. True moonstone is orthoclase feldspar, and its glow is adularescence — a soft billowy sheen that seems to float inside the stone and moves with it. Rainbow moonstone's colour is labradorescence, the same lamellar interference effect as grey labradorite, appearing as distinct flashes of blue at specific angles.
The two are easy to tell apart once described. Adularescence is a diffuse cloud of light, usually blue-white, that appears to hover beneath the surface and drifts as the stone tilts. Labradorescence is a flat sheet of saturated colour that snaps on and off. Rainbow moonstone typically also shows visible internal fractures and a stronger, more electric blue than genuine moonstone's soft glow.
Neither is a fraud — the name is simply loose, and it is well established in the trade. It matters because fine orthoclase moonstone with a clean, strong, floating blue sheen is a scarcer and more valuable material than white labradorite.