Taxis are great for travelers in South
America. In most places they are numerous and cheap. In my city of Guayaquil
which is over two million people you can go almost anywhere from between $2-$7.
However you can be cheated, and even robbed or kidnapped if you get yourself in
the wrong situation. A couple of weeks ago a co-worker and his girl friend were the victims of a "sequestro expreso" (quick kidnapping). The got into a cab and almost immediately the cab filled up with armed men. They were forced to go around to different ATMs to drain their credit cards. Of course they lost their wallets and all other money and valuables. 
Several hours later they were released physically unharmed. They were smart, they did not resist. Others have been beaten, raped and even killed when they resisted. I've known several who have been kidnapped this way over the years. I have not, which I out down to a combination of always practicing good awareness and personal security practices, but also some good luck.
Here are some smart guidelines on how to use taxis
confidently and safely in South America.
Ask the Hotel
The staff at the front desk of your hotel
should be able to help you find some reputable taxi service, so talk to them
first. In fact, you should probably ask them to call a taxi for you rather than
try to hail one out on the street. That way, you know that you're getting car
from an actual taxi company. This is also a tip that you should follow when
you're away from the hotel. Know the number of a good cab company and call for
one when you need to go anywhere. It may take a little longer than grabbing the
first car that drives by, but you never know who you're getting in a car with
that way. 
You can also ask at the desk about which
areas of the city aren't very safe for tourists, and where you should avoid.
Now, you probably won't have any particular reason to be heading to the
"bad side of town" but it doesn't hurt to know where you should steer
clear of. 
If you are in a city with a consulate, like Guayaquil where I live, you can also inquire at the consulate if they have any vetted or approved taxi services. They often have 1-2 services they use for their personnel and activities. However the downside is these companies often are very busy and not always available just for people who call up.
Most airports, shopping malls and other important businesses have approved taxi services they work with and these are almost certainly safe. However on the fringes of the properties are often other taxis, some are good but this is also where the dangerous taxis lie.
Know the Rates
This can be a bit trickier, but with a
little research, you should get to know what a typical taxi rate should be
around the city. That way you can tell when your driver is trying to rip you
off. Another side of doing some research beforehand is that you should have a
rough idea where you're going, and watch as you travel. If your driver starts
heading in the wrong direction, you'll want to notice as soon as possible.
Keep Your Stuff to Yourself
You'll most certainly be carrying something
with you when you're sight-seeing from a small backpack to a purse. That's
fine, but don't sit rifling through it or leafing through your wallet while
sitting in the cab. Don't pull out your laptop computer while en route.
Flaunting your wealth is never a safe idea. 
Recognize the Share Taxis
These type of taxis aren't common in North
America, so people are sometimes a little confused if they get into one.
Depending on the region, they are called taxi colectivos or just colectivos,
and they run more like a shuttlebus than a typical taxi. They follow a set
route and you share the it with whoever else is going that way. They are much
smaller than a public bus, sometimes just a little pickup truck, and don't usually run on a set schedule. The driver
prefers to go once the car or van is full, so you can expect a bit of waiting
if nobody else is traveling at that moment. 
I love using share taxis and buses when I travel within the country. You see much more, meet more people, and learn a lot about real life and culture than otherwise. They
are a great way to travel but you need to be aware that you'll be
sharing close quarters with several other people during your trip. My wife was robbed on one. She was traveling and dozed off. When she woke up all of her back pack zippers were opened and her wallet was missing. No one saw anything, of course. If that
doesn't appeal to you, stick to the traditional exclusive taxis. 
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