This nasty piece of spyware has no connection with the real AVG antivirus software. The latest version is AVG 8. Don't be taken in by the hoax version.
If your computer does become infected, I highly recommend you use malwarebytes to remove it.
There are two versions of malwarebytes.
A paid for one : This version provides realtime protection. It will remove even the most pernicious malware and actively protect your computer in the future. This is an excellent piece of software for use on a family computer - or any computer whose user(s) may be less than 100% vigilant or confident about which links they are clicking on!
A free one: The free version is not pro-active and doesn't provide real time protection. You will have to tell it to update and scan your computer.