This actually happened to me. My sister and I were headed to Prague from Berlin a few years ago. She was in Germany working on research for her dissertation, and I was dating a guy in Vienna at the time.
We got a late train out of Berlin, and by the time we got to Prague, it was 2:00 a.m., and all the local trams and buses were long since shut down. We had been warned about the cab overcharge issue, and decided to negotiate a rate up front. We also got another guy on the train to split it with us, since his hotel was a few blocks from the old canal boat B&B we were staying in on the river. We set a rate of something like $20 and agreed to split it. Oh - that was the other thing. At 2:00 a.m., the currency exchange was closed, so all we had were marks and $$. The $$ was very strong that summer (unlike the ass kicking I took with the exchange rate in London back in November), and the drivers were anxious to get paid in US currency.
Well, we get to the first hotel and the driver wanted $20 from EACH of us, and then another $20 from my sister and I to take us on to our hotel, claiming it was now a separate trip. (Keep in mind that this conversation is being negotiated with my sister's fluent German, my pidgin Russian and the cab driver's mix of Turkish / Czech / German / Russian).
Long story short. We gave him the original $20 period. He angrily dumped our luggage out of the trunk onto the street at 2:30 a.m. and sped away. Despite the language barriers - I understood his rant perfectly at this point. "Bitch" is a pretty universal word apparently. The guy we were with offered to let us crash in his room until morning, but we decided to keep going. We had to haul all our luggage, not exactly sure of where we were going (it's a boat right? So we headed toward the river), for about a mile and a half on a hot summer night through the middle of Old Town.
Anyway, we get to the boatel and the night clerk insists he needs our passports to "register" us with the police. I don't know about you, but having my passport leave my sight when I'm traveling abroad is not something I am particularly fond of. Now it's after 3:30 a.m. and we were exhausted, so we gave them up - after I got the name and ID of the desk clerk since he would be gone in the morning.
After this inauspicious start, we really had a fantastic time in Prague. The boatel was terrific. We had a great view of the castle and fed the swans from our window on the river every morning after breakfast. It's a magical city with wonderful atmosphere, architecture, history and people. And you can't beat the fact that you could get a liter of REALLY good Czech pilsner for about $.75.