As Scareware threats are on rise, millions of Internet users are falling pray to the scareware scams. Scareware refers to bogus sales tactics that are designed to scare a user into believing that his or her computer contains critical errors or viruses that have to be fixed immediately.

Scareware ads offer an instant solution to the so-called problems on the computer and come for a price. In some cases, this software is harmless while in others it is actually a malware or another spyware. The ad might pop up anytime when surfing the web. The ad may open a pop-up window leading people to believe that the message is triggered by their own Operating System. The message claims that the consumer's computer is infected with a virus and may require a “fix” and that clicking on “OK” would take the user to the download site from where the user could purchase the “fix”. By luring the victims to buy the software, the perpetrators may even steal sensitive information such as credit card details of the victim and these details may be sold to black market forums.

As of June 2009, over 250 rogue programs had been detected by Symantec in a study, which spanned over June 2008-09. Bogus security software could be freely available, may cost up to US $100 or come in a trial version. They may be installed manually by the user or when he opens an attachment or while surfing through a malicious website. Scareware can also be unknowingly advertised on legitimate websites such as social-network sites, forums, blogs, and appear in search engine results that are sponsored by cyber criminals. The crooks also hire sales representatives to sell their products who earn an average of US $23,000 a week. They are paid for every installation they make and even get bonuses like electronic gadgets and luxury cars.

Another type of scareware is to scare users is to use unanticipated images, sounds or video and is known as Prank software. An example of this kind of software is “NightMare”, which when executed lies dormant for some amount of time, finally changing the entire screen of the computer to an image of a skull while a horrifying shriek is played on the audio channels.

Many cases have been filed against the perpetrators of such sites and they have been asked to pay for the damages caused by them. In 2005, Microsoft and Washington State successfully sued Secure Computers for US $1 million over charges of using scareware pop-ups. Various regulatory bodies like the US Federal Trade Commission are taking an active part in trying to put an end to this menace.