Watch out for pick pockets
Over all Otavalo doesnt have alot of violent crime. It is also much safer here than it is in Quito or Guayaquil. We walked around at night with absolutely no problem. What you do have to watch out for is when there are large crowds because when you least expect it you might be missing something. Dont take your money out in public and use common sense.
I have never experienced anything like that, i think because I always try to be aware of my surroundings and where I have my cash.
My dad was pick pocketed on New Years Eve. There was alot of people around and large crowds. My dad was with a big group of people/family and they were enjoying the festivities. He said that there was an elderly woman and a bunch of kids around him and on two occasions he felt the old ladys hand in his pockets. He scolded her and went on his way. Then she did it again. Once again he scolded her and tried to get away from her. He looked in his pocket and the money was still there next to his cigarretes. When he was ready to buy something he realized his money was gone. He didnt know if it was the old lady or the kids but $80 were gone. So just be careful.
You can't always be kind.
When I went to the market in Otavalo I was overwhelmed by the number of beggars. It got a little scary at one point when I had 3 people literally hanging onto my arms asking for money. They won't hesitate to pull at your clothes and follow you. And if they see you give money they will be much more persistent.As heartless as I feel saying it you really have to be firm when saying no and keep on walking if they start ambushing you like that.