I think it could be psychologically damaging. Similar to how one of my partner's relatives told their children they would put them outside with the dingos if they did not behave. It's using excessively frightening (and often irrational) consequences for behaviour.
Although my partner had a go at me for telling our 3yo that if he touched the mower, then it might chop his hands off. But I thought that was okay as it's an actual consequence of touching the mower while in operation. We had the same conversation when I told our son the fan blades would chop his fingers off. Anyway, sometimes it's a fine line.