"I knew it was a scam from the start. But it created the impression that they could take control of the person's computer and use the webcam," Dalziel said.
"But it could be frightening to some people."
Netsafe chief executive Martin Cocker said while there had been a large spike in the number of reports, they had not heard of anyone paying up.
Read more: Juha Saarinen: Internet criminals reaching new lows
"Netsafe has received more than 300 reports from people who have been affected by this type of fake sextortion scam in the past week," Cocker said.
He said there would likely have been more that had gone unreported. While the threats were alarming, the scammer could not access your computer, he said.
"Scammers are becoming increasingly sophisticated in their methods and it's important that everyone takes steps to keep themselves safe."
If you receive an email like this, Netsafe recommends to delete and mark it as spam, and change your passwords on any accounts that may have been compromised.
- Star.kiwi