So many variations on this scam exist, we can't even list them all! But here's the gist -- someone creates a distraction, and someone else steals your wallet.
Pickpockets often work in teams. Here's one scam that's popular in Europe: While you're walking down the street minding your own business, a pretty woman arguing with a street vendor captures your attention. Her argument with the vendor, who is accusing her of stealing, escalates until a crowd gathers. Sometimes the woman will even start to take off her clothes to prove her innocence! While you and everyone else stand there gaping, her accomplice is working his way through the crowd, relieving people of their wallets and valuables.
Other methods of distraction? Someone will "accidentally" spill something on you. Or someone will point out bird poop on the back of your shirt and offer to clean it off. A group of children will surround you, begging for money or food. An elderly woman will fall down in front of you. Some people even report a person shoving a baby at you, stealing your valuables when you instinctively reach out for the child [source: IMEX].
How do you avoid falling victim? It's unfortunate that many thieves and scammers rely on your sense of humanity in order to steal money from you. Anywhere there's a crowd or scene, you're a potential victim. So be smart -- don't walk around with an open bag and don't keep your wallet in your back pocket. Keep your bag slung around you so it can't be snatched. Wear a pouch or smaller bag under your clothes.