That's a great strategy too if you know the law is on your side and are bold enough to pull it off. But I'm pretty non-confrontational (even when dealing with people I know are trying to cheat me) and when I take a cab I'm usually in an unfamiliar place where I didn't have the foresight to check on the cab regulations beforehand, so I'm going to stick with mine :)
It's amazing how those finicky card readers miraculously start working when you say 'oh well, too bad I guess' and step out of the car!