Never go with any stranger anywhere.  

That is the one effective rule about scams.  Never means not once.  Stranger means anyone who introduced themselves to you in a public place, or who you have known for less than 24 hours.  Anywhere means a physical location, such as a market or store, massage parlor, tea house, art gallery, bar or night club, Chinese medicine store, or car which does not have a taxi meter and taxi license with photo.

The majority of these scams happen at tourist spots around People's Square, East Nanjing Road and on the Bund.  Shanghainese are very friendly and always willing to help if you ask them, but they rarely approach a foreigner out of the blue and begin talking.

In general, ignore anyone who approaches you and speaks English on the street. Just keep on walking without noticing them and 20m farther, they are gone. This is not being unfriendly, but avoiding a scam.  Almost all Chinese are shy and bashful with foreigners, except those who want their picture taken with you, the major exception to the rule.  Anyone else who "comes on strong" is most likely selling (at great profit) or scamming.  

Shanghai is a very safe city. compared with other large cities around the world.  There is very little violent crime, and even less directed to foreigners. Street purse snatchings are rare, but do happen, especially right before Chinese New Year when people need money for presents.  You should take standard precautions with wallets in the buttoned front pocket, camera and purse straps around the neck (not hanging off the shoulder) and keeping your passport separate from your wallet.  The most prevalent Shanghai crime against foreigners is the scam, taking money under false pretenses.

Scams on the street:

"Tea ceremony:" you are approached by very presentable (upscale) girls or a well-matched couple and they ask if you are interested in Chinese culture (after the typical "Where are you from?"  Invariably, they really love where you are from.). Then they offer to help you to buy tea in a local tea shop or partake in a famous tea ceremony. You are billed over RMB$1000.  When you protect, you are told the police will arrest you and demand your passport if you do not pay.  Call their bluff and say, "Ok, let's call the police."  Take pictures of the new "friends" and the shop's staff and exterior.  Get a record of the scam for police and credit card charge-back.

"Art exhibition:" one or more young Chinese approach you and pretend they are art students from another city and have an exhibition where you can buy Chinese art inexpensively. You go with them to a "gallery."  These "paintings" are cheap prints and are, of course, overpriced by ten-fold.  They tell you they are "struggling artists."   Avoid laughing.  

"Take a picture:" When two or more Chinese ask you to take a picture of them with their camera, that is normal. However, then they might continue with the tea ceremony scam, inquiring about your origin, loving your origin, wanting to practice English, "Let's have tea together."  Scam.

"Need money for taxi:" One or two young people approach you claiming to be students visiting Shanghai from, say, Nanjing University. They lost their "moneybag", and need money for a taxi. (It's not surprising that they don't ask for the much cheaper busfare.)

Scams on western-looking  men:

"Lady spa/ massage": usually a male pimp or a female approaches you to offer you "special services" or personal massage. That's illegal in China.  Don't give it a moment's thought. 

Scams in bars:

Some bars in Julu Lu or Tongren Lu will get you one or two or six girls to sit with you and talk to you. For this they expect you to buy them drinks. There have been a few incidents where foreigners were roughed up by locals because they protested an extortionist bill (10X+ honest amount). Call police in the event of any scam.  They are on your side in Shanghai. Be very careful if you keep a tab as each drink costs 100rmb, typically the drinks the girls have will be watered down but customers drinks are not, and you will be encouraged to drink heavily. If you run out of cash be very careful when using a credit card not to let it out of sight, so that it is swiped only once and to check that the amount is correct. 

In a  similar scenario a stranger offers to take you to a karaoke bar or massage parlor with beautiful girls. He will assure you that if you don’t like the place or the girls, he will return you.  You go to the place, meet lovely girls and the staff will bully you out of whatever is in your wallet.   These people present a bill in thousands of yuan and if you protest, big bouncers will approach you with serious mean faces.  Pay up or else is the message.  If you must (to get out), pay up and then report to police.  (But why are you in a position where you must call police if you read this?)

Begging: 

Begging is not common in China compared with many third-world countries. Tourists are sometimes approached by beggars or see them  with small children on the street.  These children probably are not poor but just looking for an easy way to make money. They will often beg by standing near a table, then get down on one knee to beg, and as a last resort, will ask for food instead of money. First, ignore them completely.  If they refuse to leave, get rid of these kids by informing the restaurant staff, or the police.

Fake money:

Rarely a taxi driver or street vendor will give you a fake 50 or 100 RMB note. Look carefully at Mao's watermark.  Like taxi drivers, avoid torn or old looking bills. Try to avoid large bills from strangers by having smaller bills to pay small amounts. Supermarkets, hotels and restaurants are usually safe as they put 100/50 notes into a counterfeit-checking machine.

Taxi scams:

Most taxi drivers are honest. Should you experience a driver pretending that his meter is broken just say "ting!" (stop!), open the door and walk away. If it gets nasty take out your mobile and say "jing cha" (police) - this will do in most cases.  Be suspicious when  anyone offers you his/her services by "Hello, Taxi, Taxi!!". 

Arriving at Shanghai's airports, there are often people in the meet-and-greet area offering taxi services.  They will want to help you with your bags.  These are unlicensed, illegal cars and most likely you will be forced to pay a much higher fare. Always go outside the terminal to the officially marked taxi stand or queue, most times with a uniformed dispatcher. At bus stations walk one block in any direction and flag a cab down from the street. If you are heading to your hotel and have a fare dispute with your driver, always insist on being let off at the hotel's taxi stand.  Have the doorman or bellman help you with any fare dispute.  Illegal taxis or those with "broken" meters want to drop you off a dozen meters short of the hotel, so you are helpless over an outrageous fare.  

Shopping scams:

Best protection is: after you shop around, find what you want and then price it several places. Guides or "helpers" at the markets usually get a commission of up to 50%.   Any shopping helper is guaranteed to cost you money by padding the price.

When you buy a product, inspect carefully the actual item you are buying, even if it is "factory fresh."   Actually operate the item if possible, such as cameras and other electronics.  Never lose sight of what you have inspected as it is wrapped and given to you.One 

One common theme: 

Friendly strangers, sometimes incredibly talented at what they do, approach you and offer to help you with shopping, transportation, getting to know Chinese ("Please practice English with me"), procuring women and almost anything else.   Avoid and you will not be a victim.  If you are a victim, contact the police immediately.