Paid Link Policy made absolutely clear by Google!

On Webmaster Help Center Google discretely specifies the policy pertaining to "Paid Links".

It states that “Google and most other search engines use links to determine reputation. A site's ranking in Google search results is partly based on analysis of those sites that link to it. Link-based analysis is an extremely useful way of measuring a site's value, and has greatly improved the quality of web search. Both the quantity and, more importantly, the quality of links count towards this rating.

However, some SEOs and webmasters engage in the practice of buying and selling links that pass PageRank, disregarding the quality of the links, the sources, and the long-term impact it will have on their sites. Buying or selling links that pass PageRank is in violation of Google's webmaster guidelines and can negatively impact a site's ranking in search results."

But they don't consider all the paid linking as malicious, or as “violating the guidelines.” They say “Not all paid links violate our guidelines. Buying and selling links is a normal part of the economy of the web when done for advertising purposes, and not for manipulation of search results. Links purchased for advertising should be designated as such. This can be done in several ways, such as:

Adding a rel="nofollow" attribute to the <a> tag

Redirecting the links to an intermediate page that is blocked from search engines with a robots.txt file”

Not only this, they would also want you to report any such instance, if you come across one. They say "Google works hard to ensure that it fully discounts links intended to manipulate search engine results, such excessive link exchanges and purchased links that pass PageRank. If you see a site that is buying or selling links that pass PageRank, let us know. We’ll use your information to improve our algorithmic detection of such links."

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