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Wiktionary
scareware

n. (context computing informal English) software that attempts to scare the user into compliance, as by displaying false warnings of virus infection.

Wikipedia
Scareware

Scareware is a form of malicious software that uses social engineering to cause shock, anxiety, or the perception of a threat in order to manipulate users into buying unwanted software. Scareware is part of a class of malicious software that includes rogue security software, ransomware and other scam software with malicious payloads, which have limited or no benefit to users, and are pushed by unethical marketing practices. Some forms of spyware and adware also use scareware tactics.

A tactic frequently used by criminals involves convincing users that a virus has infected their computer, then suggesting that they download (and pay for) fake antivirus software to remove it. Usually the virus is entirely fictional and the software is non-functional or malware itself. According to the Anti-Phishing Working Group, the number of scareware packages in circulation rose from 2,850 to 9,287 in the second half of 2008. In the first half of 2009, the APWG identified a 585% increase in scareware programs.

The "scareware" label can also apply to any application or virus (not necessarily sold as above) which pranks users with intent to cause anxiety or panic.