Simple steps really:
1) Do not ever surrender your passport as a deposit on a motorbike.
Your passport doesn't belong to you - it's a document issued to you by your government, but it's essentially a gift that you cannot give away. Do not surrender it to anyone ever - should you do so (and I did, so I know how obvious it can seem) there are ways to get around it should you be caught in the Koh Tao Motorbike Scam.
2) Give a deposit that you can afford to lose.
Koh Tao's motorbike agencies operate thusly - they make their "real money" by jacking tourists for the smallest scratch or accident. Imagine my surprise when a fall of the bike to a sandy road at 2kph resulted in a bill for 12K baht - you could buy a whole new bike for that and the scratches were QUITE minor. A competing shop told me he could fix it for 2500 - and I got a bill for five times that. I didn't pay it - don't you do it either.
3) Give a fake name.
In case they decided to come after you.
4) And a fake guest house.
Because after all - everyone likes to pretend that Thai *hate* confrontation. Nonsense - they're masters at passive-aggressive confrontation, such as handing you a bill for 12K baht when the proper bill is less than 3K. If they want to find you - make it harder for them. Now - how's that for passive-aggressive?
If you have fallen for the Koh Tao Motorbike Scam and they've handed you a deliriously large bill and they've got your passport - don't despair. Bangkok isn't far and chances are good that your country has an Embassy there. Call first and tell them what's happening. Extortion people for money for their passport is a CRIME in the United States and it's not looked upon too favorably when people in other countries attempt to do it. A replacement passport will run you $97 plus two passport photos and your physical presence in BKK - you have to go there most of the time to leave the country - and I'm thinking Bangkok will be looking plenty refreshing after this particular rip-off, here, on the otherwise lovely island of Koh Tao.
US Embassy Information located at 95 Wireless Road in Bangkok.