Term for something that is supposed to increase safety, but really just increases fear?

Solution 1:

The general term I hear most often for this is security theater. From Wikipedia:

Security theater is the practice of investing in countermeasures intended to provide the feeling of improved security while doing little or nothing to actually achieve it.

This doesn't necessarily come with the increase in fear, but it's often associated.

An example for both issues [cost and fear] is that after a recent increase in restrictions in air travel, many frequent air travelers have expressed that they will try to avoid flying in the future. Security theater encourages people to make uninformed, counterproductive political decisions.

Of course, it's controversial exactly which measures are considered "theater" in most cases.

Solution 2:

In the UK, the terms fear mongering or scaremongering are often thrown about, particularly in regards to the media (your "terrorist report" example). The thinking is that fear sells. However, the terms themselves are often used in a negative and hyperbolic manner, so I don't think this is what you're looking for.

Solution 3:

Security theater is the word I often hear. In practice, I'm not sure enough people think about or realize that some "security" measures are theater. A related slang term is FUD, which stands for Fear, Uncertainty & Doubt. To me this describes the given examples better but theater answers the question title better. Note: To my knowledge, FUD is not widely known, so for most audiences should probably be introduced as "... F.U.D.- Fear, Uncertainty & Doubt, ..."

Feel free to edit my last example to have correct punctuation & grammar.