Google has gone on record time and time again that link schemes with the intent of manipulating Google’s search results is against their terms of service and will thus take action against web sites both algorithmically and manually.
I figured we’d post about it one more time, because Googler Wysz made a nice comment on why those penalties might not always be so clear. He made the comment in a Google Webmaster Help thread being used to out link schemers. He said:
Got that? Even when they do take action, it might not be that they completely drop the site form the index. But Google did say the action they do take is “pretty strong” in order to “preserve the quality of our [Google] results.”
He goes on to explain that once a site is penalized there are ways to repent. He explained:
Oh, and if you are one of those that report paid links, then it might be a good thread for you to check out and post in.
Forum discussion at Google Webmaster Help.